The 31 July Deadline Is Closer Than It Looks
If you're self-employed or have income outside PAYE, your second payment on account for the 2025/26 tax year is due on 31 July. For a lot of people that bill arrives at an awkward time — right after a summer of quieter invoicing, or stacked on top of a first payment on account they already struggled to find in January. The instinct is to reach for whatever's fastest: a credit card, an overdraft, maybe a quick loan advertised as "same-day funding." That instinct is understandable. It's also, in most cases, the expensive way out.
HMRC does not accept credit card payments directly — that route closed in January 2018, and it hasn't come back despite people assuming otherwise every single tax season. What actually happens is you pay the card off a personal loan, a cash advance, or a purchase that then sits on a card charging 24.9% APR or more while HMRC gets its money on time and your lender gets paid over the following two years. The tax office doesn't care how you funded the payment. Your credit file does.
What UK Lenders Will Actually Approve Right Now
Personal loans for tax bills are a real, recognised category — Zopa, Tesco Bank and several building societies quietly market "tax loans" every June and July, usually as unsecured personal loans between £1,000 and £15,000 over one to five years. Representative APRs on the better deals currently sit around 7-9% for borrowers with a clean file and income above £30,000, rising sharply — sometimes past 20% — for anyone with recent missed payments or a high existing debt-to-income ratio. Lenders will ask for your SA302 or tax calculation and, increasingly, will run an affordability check against your actual bank transactions via Open Banking rather than just a credit score. If your income is genuinely seasonal, showing three to six months of bank statements that explain the dip does more for your application than a good credit score alone.
Building societies tend to be more forgiving on this than the big high street banks, partly because they still do more manual underwriting rather than relying entirely on automated decisioning. Nationwide, Yorkshire Building Society and several regional societies will look at a self-employed applicant's tax calculation alongside two years of accounts rather than treating a single dip in reported income as an automatic decline — worth calling ahead and asking what they'll actually consider before you submit a formal application, since each hard search leaves its own mark on your file regardless of the outcome.
Credit Cards: Fine for a Bridge, Bad as a Plan
A 0% purchase card can work if — and only if — you have a realistic route to clearing the balance before the promotional period ends. The current market leader for 0% purchases runs around 20-24 months, and missing even one minimum payment during that window typically ends the 0% rate immediately and reverts you to the card's standard APR, often above 27%. Use a card for a tax bill only if you've already worked out the monthly repayment on paper and it fits your actual cash flow — not your optimistic cash flow.
Payday-style short-term lenders will approve almost anyone with a bank account and a payslip, which is exactly the problem. FCA price-cap rules mean the total cost can't exceed 0.8% per day and the total repayable can't exceed double what you borrowed, but even capped, a £3,000 tax bill borrowed for four months at close to the cap costs meaningfully more than a mainstream personal loan over the same period. These products exist because they're fast, not because they're cheap. Treat them as a last resort, not a first call.
What HMRC Will Do — and Why It's Often the Better Option
Time to Pay is HMRC's own instalment arrangement, and for a debt under £30,000 you can usually set one up online without speaking to anyone, spreading the balance over up to twelve months. The catch that catches people out: interest still accrues at HMRC's late-payment rate, currently 8.25%, and if you reduce a future payment on account claim without genuine grounds — because your income actually did fall, not because you'd rather have the cash now — HMRC can charge interest on the shortfall backdated to the original due date. That reduce-claim trap has caught out plenty of self-employed people who assumed "my income might be lower this year" was enough justification on its own.
Here's the actual comparison worth doing before you touch a credit card. HMRC's Time to Pay interest at 8.25% is usually cheaper than every unsecured borrowing option except the very best personal loan rates — and it comes with no credit search, no approval risk, and no effect on your ability to get a mortgage six months later. A personal loan from a mainstream lender at 7-9% can undercut it slightly if you're a strong applicant, but a credit card carried past its 0% window at 25%+ never will. Ranked from usually-cheapest to usually-most-expensive: HMRC Time to Pay, then a personal loan from your own bank or a comparison-site best-buy, then a 0% credit card used strictly within its promotional window, and right at the bottom, short-term or payday lending.
The Bit Nobody Mentions: Your Credit File Doesn't Know Why You Borrowed
Whichever route you take, it shows up on your file the same way any other borrowing would — Experian, Equifax and TransUnion don't tag an account "was for a tax bill." A new personal loan or a maxed-out credit card affects your credit utilisation and your debt-to-income ratio identically, whether the money went on a tax bill, a kitchen, or a holiday. If you're planning a mortgage application or a remortgage in the next twelve months, that matters more than the interest rate does. A £6,000 personal loan taken out in July can still be sitting on your file, fully visible to an underwriter, the following spring.
Guarantor Loans and Why They're a Last Resort, Not a Shortcut
If your file has a couple of missed payments on it from earlier this year, a mainstream personal loan at 7-9% probably isn't on offer, and this is where guarantor loans get pitched hard in July marketing emails. A guarantor loan from a provider such as Amigo or Bamboo typically charges somewhere between 30% and 40% APR, and it requires a friend or family member with a strong credit file to legally commit to repaying the debt if you don't. That's not a technicality — if the loan defaults, the guarantor's own credit file takes the hit, and in the worst cases they end up repaying a tax bill that was never theirs. Ask yourself honestly whether you'd offer to guarantor someone else's HMRC debt before asking someone to guarantor yours.
A cheaper and less socially awkward alternative, if you own your home, is a further advance from your existing mortgage lender — rates typically track close to your existing mortgage rate rather than personal loan or credit card rates, though it does mean secured borrowing against your house for what started as a tax bill, which is a trade worth thinking through rather than defaulting into because the rate looks attractive on paper.
If You Genuinely Can't Pay Anything by 31 July
Call HMRC or set up Time to Pay online before the deadline, not after — a payment plan agreed in advance avoids the automatic 5% late-payment penalty that applies from 30 days overdue, and it stops the daily interest clock running at the higher rate. Borrowing to avoid HMRC penalties only makes sense if the interest on the loan is lower than the combined cost of HMRC's own interest and penalties, and for most people arranging Time to Pay directly, it isn't. The one exception worth naming honestly: if a missed HMRC payment would trigger a default that a private loan wouldn't — for instance because you're mid-way through a mortgage application and any HMRC contact could complicate it — then a short personal loan from your own current account provider, arranged in advance and repaid on a fixed schedule, is a defensible choice even at a slightly higher rate than Time to Pay.
Don't let the deadline decide the borrowing method for you. Work out the actual APR, the actual repayment period, and the actual effect on your file before you pick anything — the fastest option in July is rarely the cheapest one by next April.