HMRC Tax Debt and IVAs: Can Tax Be Included?

Can HMRC Tax Debt Go Into an IVA?

Usually, yes. Personal tax debts such as self-assessment income tax and National Insurance can normally be included. HMRC votes on your IVA like other creditors.

Last updated: November 2026

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Things to know about IVAs

An IVA is a formal insolvency procedure. It must be approved by your creditors, stays on your credit file for six years, fees are taken from your payments, and debts are only written off if you complete it. It isn’t right for everyone.

Read the key risks

Creditors must approve it. An IVA only goes ahead if creditors holding at least 75% of the debt that is voted agree. Your proposal can be rejected.
Credit file and public register. An IVA stays on your credit file for six years from the start date and is listed on the public Individual Insolvency Register while it runs. Getting credit will be harder.
Spending restrictions and annual reviews. You live on an agreed budget for the length of the IVA (usually 5–6 years). Your income and spending are reviewed each year, and your payment can go up.
Fees. Fees are taken from your monthly payments, so less of what you pay reaches your creditors. How IVA fees work.
Your home. Under the current IVA Protocol, your home isn’t included in the IVA and you won’t be asked to remortgage. If your share of the equity is £10,000 or more, the IVA usually lasts six years instead of five.
If it fails. If you can’t keep up payments the IVA may fail, you would owe the remaining debt again, and the supervisor may petition for your bankruptcy.
Write-off only on completion. Remaining qualifying unsecured debts are only written off if the IVA is completed successfully. Secured debts, court fines, child maintenance, student loans and some other debts can’t be included.
Other options may suit you better. A debt management plan, DRO or bankruptcy may be more suitable. IVAs are available in England, Wales and Northern Ireland only; different solutions apply in Scotland.

Tax debts are common among self-employed people and sole traders. HMRC can be a creditor in an IVA, and it’s often one of the larger ones.

The short answer

Personal tax debts, such as self-assessment and Class 2 and 4 National Insurance, can usually be included.
VAT owed by a sole trader can usually be included too.
Tax owed by a limited company belongs to the company, not you.
HMRC votes on your proposal and may ask for specific terms.
You must keep up with new tax that falls due during the IVA.

What tax debts can be included?

If you owe tax personally, for example from self-employment, it’s an unsecured debt and can generally go into an IVA. That includes income tax, National Insurance, and VAT for sole traders and partners. Penalties and interest that have already been added are usually included too.

How does HMRC treat IVAs?

HMRC has a dedicated team that assesses IVA proposals. It looks closely at whether you’re up to date with your tax returns and whether the proposal is realistic. It may ask for modifications, such as conditions about filing returns on time during the IVA.

What if HMRC holds most of my debt?

If HMRC holds more than 25% of the debt that is voted, it can block an IVA on its own. Your insolvency practitioner will take this into account when preparing the proposal.

What about company tax?

Corporation tax and PAYE owed by a limited company are company debts. They can’t go into your personal IVA. See IVAs and company directors and debt help for the self-employed.

Common questions

Will HMRC accept an IVA?

HMRC accepts many IVAs, but it reviews each one carefully. Being up to date with tax returns improves the chances.

Do I still have to file tax returns during my IVA?

Yes. You must keep filing and paying new tax on time. Falling behind can cause your IVA to fail.

Can a tax refund be taken by my IVA?

Tax refunds for periods before your IVA may be claimed for your creditors. Your IVA terms will explain how refunds are treated.

How IVA Advice Online can help

Every situation is different, and an IVA isn’t right for everyone. We can look at your income, spending and debts with you and set out the debt solutions you could qualify for, including options other than an IVA. To talk it through, get in touch.