HMRC Timely Payments, What Could Change for Self Assessment?
Overview
HMRC is considering changes to when some people pay tax through Self Assessment. Its Timely Payments in income tax Self Assessment consultation opened on 23rd June 2026 and closed on 4th August 2026.
As at 13th October 2026, the official consultation page says HMRC is analysing feedback and has not published an outcome. There is no confirmed requirement for all sole traders to start paying tax monthly in April 2027.
The consultation discusses changes from April 2029. It covers an announced move towards collecting some Self Assessment liabilities through PAYE, and explores more frequent direct payments for other taxpayers. These future changes are separate from Making Tax Digital for Income Tax.
Detailed Content
What is HMRC proposing?
There are two important parts to the consultation.
Taxpayers with sufficient PAYE income: the government has announced an intention to collect forecast Self Assessment liabilities through PAYE each payday from April 2029. This could affect people who have employment or pension income alongside income reported through Self Assessment. The consultation considers the design and safeguards; implementation requires the relevant legislation.
Other Self Assessment taxpayers: HMRC is exploring more frequent direct payments on account from April 2029. Monthly or quarterly payments are possible options, not a finalised universal monthly payment rule.
Forecasts could be based on previous tax returns, with updates where circumstances change. The final tax liability would still need to be reconciled, potentially resulting in a balancing payment or repayment.
Who could be affected?
The discussion is wider than sole traders alone. It may be relevant to self-employed people, landlords and other people with Self Assessment liabilities, including those who also receive income taxed through PAYE.
The consultation does not establish a general £20,000 income threshold for monthly tax payments. Final eligibility, payment frequency and transitional arrangements must not be assumed.
What are the current payments on account rules?
Payments on account are advance payments towards the next Self Assessment tax bill, including Class 4 National Insurance where applicable. Each instalment is normally half the relevant previous year's bill, payable on:
31st January.
31st July.
They are not required in every case. HMRC lists exceptions where the previous year's tax was less than £1,000 or more than 80% was paid outside Self Assessment, for example through a tax code.
A balancing payment for the previous tax year may also be due on 31st January. For someone making payments on account for the first time, that January payment can therefore be substantially larger than expected.
If your expected liability falls, you may be able to reduce payments on account. Reducing them too far can lead to interest, so use a realistic forecast and seek advice.
Does Making Tax Digital mean paying tax monthly?
No. Making Tax Digital for Income Tax changes record-keeping and reporting requirements. It does not, by itself, replace the current tax-payment deadlines with monthly payments.
The phased entry dates for eligible sole traders and landlords are:
6th April 2026 - (More than £50,000 in 2024/25)
6th April 2027- (More than £30,000 in 2025/26)
6th April 2028 - (More than £20,000 in 2026/27)
Qualifying income generally means combined gross income from self-employment and property before expenses, rather than net profit. Eligibility and exemptions must also be checked.
Can I choose to pay monthly now?
Yes. If you are up to date with your previous Self Assessment payments, you can set up HMRC's Budget Payment Plan to make weekly or monthly Direct Debit payments towards your next bill.
This is voluntary budgeting, not a new compulsory monthly tax regime. You must still pay any shortfall by the normal deadline. If you cannot pay a bill when due, seek advice about payment difficulties and possible Time to Pay arrangements instead.
Should I incorporate to avoid the proposals?
Do not change your business structure solely because of an unfinalised payment proposal.
Corporation Tax is separate from personal Self Assessment, but running a company does not necessarily remove your personal tax liabilities. Directors receiving dividends or other untaxed income may still have Self Assessment obligations. Companies may also have employer responsibilities under future PAYE collection changes.
There is no universal £50,000 profit threshold at which incorporation becomes the best choice. Compare the full company and personal tax position, administration costs, pension plans, cash needs and commercial reasons before deciding.
Step by Step Procedure
Check your current payment dates. Confirm your payments on account and any balancing payment using your tax calculation and HMRC account.
Keep reporting and payment separate. Check your MTD eligibility without assuming it changes when tax is due.
Maintain a tax reserve. Use current bookkeeping and a realistic forecast to set aside funds regularly.
Consider voluntary instalments. A Budget Payment Plan may help if you are eligible, but it does not extend deadlines.
Review changes in income. Discuss reductions in payments on account with your adviser before making a claim.
Monitor official developments. Wait for the consultation response and relevant legislation before treating future payment options as confirmed requirements.
Frequently Asked Questions
Will every self-employed person have to pay tax monthly?
That has not been confirmed. The consultation explores more frequent direct payments, including monthly or quarterly options, alongside proposed collection through PAYE for taxpayers with sufficient PAYE income.
When could the changes start?
The consultation discusses April 2029, not April 2027. Details and legal implementation still need to be checked as the policy develops.
Is the consultation still open?
No. It closed on 4th August 2026. As at 13th October 2026, HMRC's official page says it is analysing feedback.
Is £20,000 the monthly-payment threshold?
No such threshold is established by this consultation. More than £20,000 is the qualifying-income threshold for the April 2028 phase of MTD for Income Tax, subject to eligibility and exemptions.
Does this affect limited companies?
The consultation concerns personal Self Assessment rather than Corporation Tax payment rules. However, directors may have personal liabilities within scope, and companies may have payroll responsibilities if PAYE collection changes are implemented.
What should I do now?
Continue meeting existing deadlines, keep your records current and plan your tax reserves. 360 Accounts & Bookkeeping can help you understand your payment obligations, forecast liabilities and review your business structure without relying on speculative tax savings.