IRD Debt?

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Paying off IRD debt in New Zealand: loan options, payment plans, and what to consider (February 2026)

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If you owe tax to Inland Revenue, the most important step is to deal with it early. IRD is clear that they can work with you to find a solution before things escalate.

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This article covers two paths:

1. working with IRD to manage the debt, and

2. using lending (including a mortgage top up or refinancing) to clear the balance.

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1) Start with IRD: instalment arrangements and financial relief

Instalment arrangement (payment plan)
If you cannot pay your tax in full by the due date, you can request an instalment arrangement through myIR. IRD describes this as a form of financial relief, where you repay set amounts weekly, fortnightly, or monthly. Keeping to the plan can help prevent further collection action.

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It is still important to know that overdue balances may continue to attract penalties and use of money interest, depending on your situation.

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Financial relief (hardship support)
If you cannot meet payments, IRD says you may be able to apply for financial relief, which can include writing off penalties or certain amounts in some circumstances.

If the debt relates to a business, IRD may ask for additional information such as a cash flow forecast to understand your situation.

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2) Using a loan to clear IRD debt: what options exist

Borrowing to pay IRD debt can make sense when it lowers overall cost, stabilises cash flow, and gives you a clear repayment structure. It can also increase risk because you are turning tax debt into lending debt, sometimes secured against your home.

 

Option A: Mortgage top up or refinancing your home loan

This is often the lowest interest option if you have enough equity and the repayments are affordable.

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What usually affects approval:

• Equity and loan to value ratio (LVR): many banks use 80 percent LVR as a key benchmark in their policies, and high LVR lending is limited across the system. The Reserve Bank sets LVR “speed limits” for banks.

• Debt to income (DTI): since 1 July 2024, banks have operated under DTI rules, which can limit how much you can borrow even when you have equity.

 

Key trade off: you may reduce interest cost, but you are securing the debt against your home.

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Option B: Unsecured personal loan or debt consolidation loan

This can work when you do not have property available, or when you need a straightforward fixed term repayment plan.

 

What to expect:

• Rates are usually higher than a mortgage, because there is no property security.

• Lenders are required to assess that a loan is likely affordable.

• Personal loans are covered by the responsible lending framework under the Credit Contracts and Consumer Finance Act.

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Option C: Business lending to clear business tax arrears

If the IRD debt relates to a business, there are lending options that may be structured as unsecured or secured against business assets, depending on the lender and financials.

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Important New Zealand detail: when credit is for business or investment purposes, lenders may require a business purpose declaration. If you sign one, the loan generally loses most consumer protections under the CCCFA (other than protections against oppressive contracts).

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When borrowing can be the right move

A loan to clear IRD debt is often most useful when:

• the new lending reduces total cost compared with letting the IRD balance roll on

• repayments are realistic for your household or business cash flow

• there is a plan in place to prevent the debt building again (for example, updating provisional tax settings and cash flow planning)

 

How Finance Corp. can help

Finance Corp. can help you map the best pathway, including:

• reviewing your IRD balance, cash flow, and repayment capacity

• checking whether a mortgage top up, refinance, personal loan, or business lending solution is the best fit

• comparing lender options and structuring repayments to suit your situation

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To talk through your options, call 022 125 9110.

 

This is general information only. For advice specific to your circumstances, speak with a licensed adviser and, where relevant, your accountant or tax agent.

 

This article is accurate as of 23 February 2026. Please note that financial advice changes regularly, so this information in this article, should be used as a guide only. Please call us for up-to-date information.

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