Owing tax to HMRC is common among self-employed people who have had a difficult trading period, and it raises a specific question for a remortgage: does it show on your credit file, and how will a lender treat it? Unpaid tax itself is not usually a standard credit file entry in the way a default or CCJ is, but it can still affect affordability, and it can turn into a CCJ if HMRC takes court action to recover it.
This page sets out what is generally known about HMRC debt and mortgage applications. For the wider evidence lenders ask self-employed applicants for, see our main page on self-employed bad credit remortgages.
On this page
This page covers
- Reason for remortgaging
- Consolidating debtsSecuring debts on your home carries extra risk and needs careful thought.
- Employment
- Self-employedLenders commonly ask for tax calculations and accounts covering one or more years.
Read the main guide: Remortgaging when you are self-employed and have bad credit
In short
- Unpaid tax on its own is not a typical credit file entry, but a Time to Pay arrangement is likely to be treated as a committed monthly outgoing.
- If HMRC obtains a CCJ over unpaid tax, that judgment appears on your credit file like any other.
- Lenders will want to know about a Time to Pay arrangement, or unpaid tax, even where it is not visible on your file.
- Using a remortgage to clear a tax debt turns it into debt secured on your home, which carries its own risks.
Your home may be repossessed if you do not keep up repayments on your mortgage. Think carefully before securing other debts against your home. Borrowing over a longer term can mean paying back more in total.
Does owing HMRC show on your credit file?
An unpaid self-assessment bill on its own is not routinely reported to the credit reference agencies the way a default from a bank or credit card provider is. That does not mean it is invisible to a lender: mortgage application forms usually ask directly about outstanding tax liabilities and any arrangement to pay them, and bank statements can show HMRC payments or the absence of them.
If HMRC takes court action over unpaid tax and obtains a county court judgment, that judgment is recorded and shows on your credit file for 6 years from the judgment date, in the same way as any other CCJ.
How is a Time to Pay arrangement treated?
| Situation | How it is generally treated |
|---|---|
| Time to Pay arrangement, up to date | Usually counted as a committed monthly outgoing in the affordability assessment. |
| Unpaid tax, no arrangement in place | Likely to concern lenders more, since there is no agreed repayment plan to assess. |
| CCJ obtained by HMRC over unpaid tax | Shows on your credit file for 6 years from the judgment date, like any other CCJ. |
General information only. If you are behind with tax, check current guidance and options directly with HMRC.
A Time to Pay arrangement being kept to on time is generally viewed more favourably than an unpaid bill with no plan, because it shows the debt is being managed. GOV.UK explains what to do if you cannot pay your tax bill, including how to set one up.
Should you remortgage to clear tax debt?
Some self-employed homeowners consider raising money on a remortgage to pay off HMRC in one go. This moves an unsecured tax debt onto your mortgage, secured against your home, and a longer mortgage term can mean paying more in total even at a lower monthly cost. It is not something to decide quickly, and a regulated adviser must consider whether it is appropriate for you specifically.
Our page on debt consolidation remortgages for HMRC tax debt looks at this route in more detail, including the alternative of agreeing a Time to Pay arrangement directly with HMRC instead.
If HMRC debt is part of a wider financial difficulty, free and impartial advice is available from MoneyHelper, StepChange and National Debtline before you decide how to deal with it.
Preparing to discuss HMRC debt with an adviser
- The amount owed, and whether it relates to income tax, VAT or another liability.
- Details of any Time to Pay arrangement, including the monthly amount and how long it has left to run.
- Evidence that payments under the arrangement have been kept up.
- Whether HMRC has taken, or threatened, court action.
- Your SA302s and tax year overviews for the years affected.
- Your credit reports from Experian, Equifax and TransUnion.
Being upfront about a tax debt, rather than leaving a lender to find it later in the process, generally makes it easier for an adviser to identify which lenders may be able to help.
What may affect options when you owe HMRC
| Factor | Why it matters |
|---|---|
| Whether a Time to Pay arrangement is in place | An agreed, up-to-date arrangement is usually viewed more favourably than unpaid tax with no plan. |
| Size of the debt relative to income | A larger liability affects affordability more, alongside your usual outgoings. |
| Whether HMRC has taken court action | A CCJ obtained by HMRC is treated like any other CCJ on your credit file. |
| Consistency of tax return filing | A pattern of late returns can raise separate questions about your accounts. |
| Underlying trading performance | Whether the tax debt arose from a one-off difficult year or an ongoing decline. |
| Other credit issues | Whether the same difficult period also led to other defaults or missed payments. |
| Loan to value | How much equity you have if you are considering raising money to clear the debt. |
These are general points, not lender rules. Each lender sets and changes its own criteria.
Information an adviser may ask for
You don’t need all of this to make an enquiry. It helps to know where to find it, because an adviser is likely to ask about most of it.
- The amount owed to HMRC and what it relates to
- Details of any Time to Pay arrangement and your payment history under it
- Confirmation of whether HMRC has taken or threatened court action
- Your SA302s and tax year overviews for the relevant years
- Your credit reports from Experian, Equifax and TransUnion
- An explanation of what caused the tax debt and your current trading position
Frequently asked questions
Will owing HMRC show up on my credit file?
Not usually as a standard entry, unlike a default from a bank. But if HMRC obtains a county court judgment over unpaid tax, that judgment appears on your file for 6 years from the judgment date, the same as any other CCJ.
Do I have to tell a lender I owe HMRC even if it does not show on my file?
Mortgage application forms usually ask directly about outstanding tax liabilities and any repayment arrangement, so this is generally something you need to disclose regardless of whether it appears on your credit file.
Is a Time to Pay arrangement treated the same as an unpaid bill?
Not usually. An arrangement being kept up to date is generally seen as more manageable than tax owed with no agreed plan, since it shows the debt is being addressed in a structured way.
Should I remortgage to pay off my HMRC debt?
It is an option some people consider, but it secures a previously unsecured debt against your home and can mean paying more overall over a longer term. A regulated adviser must weigh whether this is appropriate for you, and it is worth comparing it with agreeing a Time to Pay arrangement directly with HMRC first.