HMRC wants Self Assessment Tax paid much earlier
Here’s what you need to know
If you’ve ever had that sinking feeling when your Self-Assessment tax bill arrives in January, you’re not alone.
In fact, HMRC says around one in five Self-Assessment tax bills are paid late. Their view is that the current system often leaves too much time between earning income and paying the tax due on it.
That’s why HMRC has launched a new consultation on “Timely Payment” in Income Tax Self-Assessment. A proposal that could fundamentally change how millions of self-employed individuals, landlords and side-hustlers pay their tax.
We’ve also recorded a short video explaining the proposals in simple terms, which you can watch here:
HMRC wants many taxpayers to start paying tax much closer to the time they earn their income.
At present, there can be a very long delay between earning money and paying the associated tax. For some taxpayers, HMRC estimates this delay can be up to 22 months.
For example, a self-employed person earning income during the 2026/27 tax year may not pay some of the associated tax until January 2028.
HMRC believes this contributes to:
- Unexpected tax bills (“bill shock”)
- Cashflow difficulties
- Late payments
- Growing tax debt
The proposed changes are designed to smooth those payments out over the year instead.
Who will be affected?
The first group HMRC is targeting are people who have:
- Income taxed through PAYE (employment or pension income); and
- Income that is reported through Self Assessment.
Examples might include:
- Someone with a full-time job and a side business
- A landlord with employment income
- A consultant who receives both PAYE and self-employed income
Under the proposals, HMRC would use PAYE to collect estimated Self Assessment tax liabilities throughout the year.
The changes are currently planned for April 2029.
- Unexpected tax bills (“bill shock”)
- Cashflow difficulties
- Late payments
- Growing tax debt
The proposed changes are designed to smooth those payments out over the year instead.
How would it work?
Rather than making large Payments on Account in January and July, HMRC would estimate your expected Self Assessment tax bill based on previous tax returns.
That estimated liability would then be divided across the year and collected through your PAYE tax code.
In practice, that means:
- More tax deducted from your salary or pension each payday
- Smaller and more regular payments
- Less reliance on large lump-sum tax payments
You would still complete a Self Assessment tax return each year.
At that point, HMRC would compare what you have paid against what you actually owe.
If you’ve paid too much, you’ll receive a refund.
If you’ve paid too little, you’ll make a balancing payment.
What about fully self-employed individuals?
This is where things get particularly interesting.
The consultation also asks whether taxpayers who don’t have PAYE income should move towards more regular tax payments as well.
At the moment, many self-employed individuals make:
- A payment on account in January
- A payment on account in July
- A balancing payment the following January
HMRC is exploring whether these taxpayers should instead pay monthly or quarterly instalments throughout the year.
No decision has been made yet, but it’s clear that HMRC is interested in moving the entire Self Assessment system towards more frequent tax payments.
This proposal does not increase the amount of tax you pay
Your overall tax liability remains exactly the same.
The only thing changing is when you pay it.
For some taxpayers, this could actually make budgeting easier.
Rather than facing a large January bill each year, the tax would be spread more evenly across the year.
For new businesses in particular, HMRC believes this could reduce the shock of receiving a first tax bill that often arrives alongside Payments on Account for the following year.
The challenges
Of course, the proposals are not without concerns.
Many self-employed individuals and landlords have irregular income patterns for example where a seasonal business might earn most of its income during just a few months of the year. Others may wait months before customers pay invoices.
Bringing tax payments forward could create cashflow pressures, especially during the transition period when taxpayers may find themselves paying tax under both the old and new systems at the same time.
HMRC acknowledges these concerns and is actively seeking feedback on how taxpayers can be protected.
What happens next?
The consultation is open until 4 August 2026 (yeah, what a great time to do it, thanks HMRC)
HMRC will review responses and is expected to publish its conclusions later this year and if the reforms proceed, the first changes are expected to take effect from April 2029.
While that may sound a long way off, this could become one of the biggest changes to Self-Assessment payment timing in decades.
How JP Blackmoor can help
At JP Blackmoor, we can certainly see the logic behind helping taxpayers avoid large surprise tax bills however, for many business owners, cashflow is king. Add to that the fact most coding notices are inaccurate, unreliable and already create a huge amount of stress for Taxpayers. Before we see the new Tax payment system introduced, we would want a full reform of the coding notice system and assurances from Government that REPAYMENTS will also be more swiftly repaid to Taxpayers. It can’t be one rule for HMRC and one for us! A level playing field is where compliance needs to be.
As always, the detail will be crucial.
We’ll continue monitoring developments and keep clients updated as the consultation progresses.
In the meantime, if you’d like to discuss how these proposals could affect you or your business, please get in touch with Tom or a member of the team.
