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UPDATE 1-Britain to submit "Brexit bill" proposal before December EU meeting

(Adds comments on trade, negotiations)

LONDON, Nov 19 (Reuters) - Britain will submit proposals on how to settle its divorce bill with the European Union before an EU summit next month and is expected to negotiate hard, finance minister Philip Hammond said on Sunday.

The EU told Prime Minister Theresa May on Friday that there was more work to be done to unlock the Brexit talks, repeating its early December deadline for her to flesh out Britain's opening offer on the financial settlement.

"We will make our proposals to the European Union in time for the Council," Hammond told the BBC, referring to the Dec. 14-15 meeting of EU heads of government.

He was speaking three days before he sets out Britain's budget plan, where he will have to find room within tight fiscal constraints to help May convince voters that the Conservative government is tackling Britain's domestic problems at the same time as negotiating its exit from the EU.

Last week, May met fellow EU leaders to try to break a deadlock over how much Britain will pay on leaving the bloc, an issue threatening to derail British hopes for a negotiated exit and an agreement on a new trading relationship by March 2019.

May has signalled she would increase an initial offer that is estimated at some 20 billion euros ($24 billion) - about a third of what Brussels wants.

But Hammond, who has been criticised by supporters of Brexit for being too conciliatory towards Brussels and lobbying for a "softer" exit, said Britain would take a tough stance about how much it owes.

"There are some things that we're very clear we do owe under the treaties, other things where we dispute the amounts or even whether something should be included," Hammond said in a separate interview with ITV television.

"Of course we'll negotiate hard to get the very best deal for the British taxpayer."

Asked about the prospect of Brexit without a trade deal, Hammond said he was "increasingly confident" that an agreement could be reached because it was in the interests of both parties.

Despite scepticism in Brussels over the tight timetable, May and her chief negotiator David Davis have been clear they want to have a full post-Brexit free trade deal sealed by the time Britain leaves.

However, Hammond set out a softer stance on the timing of the trade deal.

"We hope that it will be agreed, certainly in principle, that the big elements of it will be agreed before March 2019 so that everybody knows where we are going," he told ITV.

($1 = 0.8480 euros) (Reporting by William James; Editing by Mark Heinrich)