Every January, a meaningful slice of Self Assessment clients realise they cannot pay the bill in full. Some panic. Some go quiet. A few claim they will sort it out and then do not. HMRC has, for several years now, offered Time to Pay arrangements that let qualifying taxpayers spread the liability over up to 12 months. The mechanism is well established but routinely under-used because firms do not raise it early enough.
This is a practical guide to the current rules in 2026, who genuinely qualifies, what HMRC asks during the assessment, and the conversation script that gets the best outcome for both the client and the firm.
The online self-serve threshold
A Self Assessment taxpayer can set up a Time to Pay arrangement online, without speaking to HMRC, where they meet all of the following conditions: the total liability is £30,000 or less, they are within 60 days of the 31 January payment deadline, they have filed the underlying Self Assessment return, they have no other outstanding tax debts, and they are not already in an arrangement. The standard maximum spread is 12 monthly instalments.
Liabilities above £30,000, or arrangements outside the 60-day window, require a phone call to HMRC. The Business Payment Support Service is the right number for active businesses; individual taxpayers go through the Self Assessment helpline. Expect a 15-30 minute call covering income, outgoings, and a means-of-payment discussion.
What HMRC asks during the affordability check
For phone-based arrangements above the online threshold, HMRC conducts a basic affordability assessment. They are not auditing the taxpayer's lifestyle - they are checking that the proposed instalment is sustainable. Expect questions covering monthly income from all sources, mortgage or rent, council tax, utilities, essential household costs, and other debt repayments. The principle is that essential outgoings come first, the proposed Time to Pay instalment comes second, and discretionary spending is squeezed.
- Net monthly income from employment, self-employment, pension, or benefits
- Mortgage or rent (with evidence on request)
- Council tax, utilities, broadband, mobile
- Food, fuel, insurance, essential travel
- Other priority debt repayments (HMRC will not displace council tax or magistrates' court fines)
- Savings and easily-realisable assets
Interest and the cost of waiting
Time to Pay arrangements accrue interest at the prevailing HMRC rate, which in 2026 sits well above historic norms - currently 7.5% for most taxes. Clients should understand that the convenience of spreading the liability is not free. For modest balances, the interest cost is often manageable; for larger balances spread over the full 12 months, the cumulative interest can add hundreds of pounds.
Run a quick comparison with the client: total interest if they pay by 31 January from savings, versus total interest if they accept the Time to Pay. If they have low-interest savings or a high-interest current account, paying in full is usually cheaper. If they would otherwise resort to a credit card at 22%+ APR, Time to Pay is the better route by a wide margin.
When Time to Pay is the wrong answer
Time to Pay solves a temporary cash flow problem. It does not solve underemployment, business failure, or structural over-trading. Where the client cannot realistically meet the proposed instalments, an arrangement will simply break, the full liability will fall due again, and they will be back in the same position with HMRC less sympathetic the second time. In those situations, the harder conversation is about scaling back, restructuring, or seeking insolvency advice.
A client with three years of escalating Self Assessment balances is not a Time to Pay candidate. They are a candidate for a serious conversation about whether their business is viable, and if so, what the cost base needs to look like. Refer to a licensed insolvency practitioner if the numbers genuinely do not work - it protects the client and you.
The client conversation script
Open with empathy but get to the numbers quickly. "I can see the balance is significantly higher than last year. Before we talk options, can you tell me realistically what you can pay by 31 January, and what you could afford monthly after that?" From the answers, you can usually triage in under five minutes: can pay in full (no action needed), can pay most plus a short Time to Pay (online self-serve), needs a longer arrangement (HMRC phone call), or genuinely cannot pay (refer for further advice).
Avoid the temptation to set the arrangement up for them. The client should make the call or complete the online process themselves - HMRC will speak to the taxpayer, not the agent, for affordability questions, and the client gains a clearer understanding of the commitment they are making.
When to raise it
Mid-November is the right time to flag potential affordability issues. The return is filed or nearly filed, the liability is known, and the client still has six weeks to plan. Raising it on 28 January means the client is already stressed, the online service is congested, and HMRC phone lines have long waits. Practices that build a December affordability conversation into their Self Assessment workflow consistently report lower default rates and fewer post-deadline crises.
Accupe is a useful place to track which clients are flagged for an affordability conversation - a simple status field on each Self Assessment job, owned by a specific staff member, with a reminder set for mid-November. The arrangement itself is set up by the client with HMRC; your role is to surface the conversation early enough to be useful.
What can go wrong with an arrangement in place
A Time to Pay arrangement is conditional on the client meeting every subsequent payment and keeping current with any new tax that falls due. Miss an instalment and the arrangement collapses; the full balance becomes payable. The most common cause of collapse is the next Self Assessment year - the client cannot pay both the current Time to Pay instalments and the new July payment on account.
Flag this in the client file. Anyone with an active Time to Pay arrangement should be a priority for the next year's tax planning conversation: payment on account reduction claims where justified, pricing reviews where the business has changed, and an early heads-up about the next January balance.
Closing
Time to Pay is a legitimate, well-used HMRC mechanism - not a sign of failure. Frame it as cash flow planning, raise it early, let the client interact with HMRC directly, and follow up on any active arrangement at the next year's planning meeting. Done well, it strengthens the client relationship by demonstrating that the firm engages with the realities of the client's position, not just the technical numbers on the return.