HMRC Time to Pay vs Bridging Loan
HMRC Time to Pay (TTP) and a bridging loan both solve the same problem: you have a tax bill due and insufficient cash to pay it. But they work differently, cost differently, and carry different risks.
Which Is Right for Your Tax Bill?
TTP is interest only with no arrangement fee - but it requires HMRC approval and is not guaranteed. A bridging loan is certain but carries arrangement fees. This guide compares both options at different tax bill sizes and timelines so you can make an informed choice.
TTP vs Bridging - Cost Comparison at Key Scenarios - August 2026
| Scenario | HMRC TTP cost | Bridging cost | Which wins? |
|---|---|---|---|
| £30,000 VAT - 30 days late, TTP agreed after deadline | £188 interest + £900 first penalty = £1,088 | 0.75%/month × 1 month on £30k: £225 + £600 fee + £1,200 legal = £2,025 | TTP (if approved before deadline and no penalty) - but only if TTP approved in time |
| £30,000 VAT - pay on time via bridge (pre-deadline) | £0 HMRC cost (paid on time with bridge) | £2,025 (1 month bridge) | Bridge wins on compliance. TTP impossible here - deadline not yet passed. |
| £100,000 CT - 45 days late, TTP applied before 30 days | £954 interest, no second penalty | 0.75%/month × 2 months on £100k: £1,511 + £1,500 fee + £1,500 legal = £4,511 | TTP is cheaper IF approved - but the £3,000 saving must be weighed against the approval uncertainty. |
| £100,000 CT - TTP refused, now 45 days late | £954 interest + £5,000 penalty = £5,954 escalating | Bridge arranged immediately: £4,511 total | Bridge wins - TTP refusal turned a cheap option expensive. |
| £500,000 VAT - TTP approved (large, viable business) | £9,543 interest over 6 months | 0.75%/month × 6 months on £500k: £22,981 + £7,500 fee + £3,000 legal = £33,481 | TTP wins significantly at this size and timeline IF approved |
| £500,000 VAT - TTP refused (HMRC sees compliance risk) | £14,315 interest + £15,000 penalties = £29,315 escalating | Bridge at same cost: £33,481 but no escalation risk | Bridge wins on certainty - same cost but guaranteed outcome |
Indicative rates - August 2026. Rates change daily. Actual rate depends on LTV, security, credit profile, loan size, and exit strategy. Contact our team for a live rate comparison for your specific case. All rates sourced from lender product sheets and publicly available market data.
What determines your rate
When TTP is better
HMRC Time to Pay is better than bridging when: (1) you are confident of HMRC approval (clean compliance record, viable business, genuine short-term difficulty); (2) the tax bill is large (above £200,000) and the timeline is short (under 3 months) - the interest savings over bridging are substantial at this scale; (3) you do not have suitable property security for a bridge; (4) you can apply before the deadline and get approval in time.
When bridging is better
Bridging is better than TTP when: (1) certainty matters more than cost - a bridge is guaranteed, TTP is not; (2) the business has compliance issues that may make TTP approval unlikely; (3) the tax bill is smaller (under £100,000) and the timeline is short - bridging cost vs penalty saving is favourable; (4) TTP has already been refused or broken down; (5) speed is critical - HMRC TTP applications take time and the deadline is imminent.
The 15-day grace window
For VAT, HMRC provides a 15-day grace window after the due date where you can pay in full OR contact HMRC to propose a TTP before the first 3% penalty applies. This window is crucial - if you act within 15 days, the first penalty is avoided. If you contact us the day the VAT deadline passes, we can have bridging in principle within hours and the bridge completed within 7-14 days - potentially within the 15-day window.
TTP for HMRC interest - bridging is more expensive
HMRC's TTP interest rate (7.75% p.a.) is lower than a bridging loan rate (0.65%-0.85%/month = 7.8%-10.2% p.a.) on a pure interest comparison. However, bridging has arrangement fees that HMRC does not charge. On very large tax bills over short timelines, TTP is cheaper on a total cost basis - provided it is approved.
Combining TTP and bridging
In some cases, both are appropriate simultaneously: a bridge covers the immediate tax liability (paying HMRC on time), and the bridge is then repaid via a TTP arrangement with the bridging lender (effectively using the bridge as a buffer between the HMRC deadline and a structured repayment plan). This is complex - discuss with us before proceeding.
Worked cost example
£75,000 corporation tax bill. 3 possible outcomes:
Outcome 1 - TTP approved before deadline (best case):
HMRC interest for 4 months at 7.75% p.a.: £1,929. No penalties. Total HMRC cost: £1,929.
Outcome 2 - Bridge arranged (certain payment):
0.75%/month for 4 months: £2,267. Arrangement fee (1.5%): £1,125. Legal: £1,500. Total: £4,892.
Certainty premium: £2,963 over TTP best case.
Outcome 3 - TTP refused, 45 days late, second TTP refused at 30 days:
Interest for 45 days: £717. First 3% penalty (day 15): £2,250. Second 3% penalty (day 30): £2,250.
Total HMRC cost: £5,217. Plus ongoing escalation risk.
NET SAVING - TTP approved vs bridge: TTP (£1,929) saves £2,963 vs bridge (£4,892). TTP wins IF approved.
NET SAVING - Bridge vs TTP refused: Bridge (£4,892) saves £325+ vs TTP-refused outcome (£5,217+). Bridge wins if TTP likely refused.
INTEREST BREAKDOWN - bridge: interest £2,267 + fees £2,625. HMRC TTP: interest £1,929 + zero fees.
CONCLUSION: The £2,963 certainty premium of bridging over TTP is reasonable insurance against TTP refusal - which turns a cheap option into the most expensive outcome.
Rate context and outlook
HMRC's Time to Pay statistics show that the vast majority of TTP requests are approved - HMRC prefers payment over insolvency. However, businesses with poor compliance records, HMRC investigations, or previous TTP defaults face a much higher refusal rate. The April 2025 penalty reform (3%+3%+10%) has significantly changed the TTP vs bridging calculation for VAT - the first-penalty bite at day 15 now makes acting before the 15-day window critical.
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Frequently asked questions
How do I apply for HMRC Time to Pay?
For VAT: call HMRC's VAT payment helpline (0300 200 3700). For Corporation Tax: call 0300 200 3410. For Self Assessment: call 0300 200 3822. Have your tax reference number, the amount owed, and your proposal for payment (over how many months, from what source). Apply before the deadline - HMRC's approach is far more sympathetic before the deadline than after.
What if HMRC refuses my Time to Pay application?
If HMRC refuses TTP, arrange bridging immediately - every day of delay increases the penalty and interest exposure. The good news is that TTP refusal is often not final: HMRC may accept a revised proposal with more evidence of business viability. We can arrange a bridge to clear the immediate liability while you re-approach HMRC with a revised proposal.
Can I have both TTP and a bridging loan?
Not simultaneously for the same liability - HMRC will consider the tax paid once it is paid, regardless of how. A bridge pays HMRC in full; TTP is an arrangement to pay HMRC over time. They serve different purposes: bridging pays now, TTP defers payment. Once the bridge pays HMRC, TTP is not relevant - the bridge replaces TTP.
Does HMRC check my credit score for a TTP application?
HMRC does not use commercial credit scores. They assess: your tax compliance history, the viability of your business, your ability to maintain payments under the proposed plan, whether you have assets that could pay the liability, and whether you have applied to other lenders (since April 2024 this requirement has been relaxed for personal representatives). A history of broken TTP arrangements significantly reduces approval chances.
What happens if I miss a TTP payment?
HMRC typically treats the entire TTP arrangement as broken if you miss an instalment - the full remaining balance becomes immediately due and HMRC may accelerate enforcement. If a TTP payment is at risk, contact HMRC immediately to discuss - and consider a bridge to clear the remaining balance and prevent TTP breakdown.
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