Headlines about HMRC wanting tax money sooner have left many small business owners wondering what is actually changing. This article separates what is law today from what has been announced for the future, and explains how the current payment dates work so you can plan your cash flow with confidence.
What it means
At the moment, most small businesses pay tax after the money has been earned, sometimes many months later. Talk of "earlier" or more frequent payments refers to ideas that would bring payment closer to when profits arise, for example through quarterly or in-year payments.
Under current law, there is no requirement for small businesses, sole traders or landlords to pay income tax or Corporation Tax in-year or quarterly.
What was announced at Budget 2026
On 28 October 2026 the government announced that, from April 2029, taxpayers who make payments on account will make smaller, more regular payments during the tax year the income is earned. HMRC says it has not yet decided how often payments will be made, and that further information will be provided in 2027.
According to HMRC's factsheet, the payments will be automated, for example by Direct Debit, and will still be based on the previous year's tax. Tax returns will still be due by 31 January, and the change affects when tax is paid, not how much is owed. The 2029 to 2030 tax year will be a transition year.
This is a planned change, not current law. Until it takes effect, the payment dates below apply.
Who it affects
- Sole traders and landlords, who pay income tax through Self Assessment.
- Limited company directors, whose companies pay Corporation Tax.
- Startups and small business owners, who tend to feel cash-flow pressure most when tax bills arrive.
Large companies are already treated differently. Broadly, those with taxable profits over £1.5 million (adjusted for associated companies) already pay Corporation Tax in quarterly instalments. That is existing law and does not apply to most small businesses.
Current rules and requirements
Sole traders and landlords
Income tax is paid through Self Assessment. The balancing payment for a tax year is due by 31 January after the year ends. So the 2025/26 balancing payment is due by 31 January 2027, and the 2026/27 balancing payment is due by 31 January 2028.
Payments on account
Payments on account are advance payments towards the next year's bill. They are due by 31 January and 31 July, and each is normally half of the previous year's Self Assessment bill. For 2026/27 they fall due on 31 January 2027 and 31 July 2027.
You are not normally required to make them if your last Self Assessment bill was under £1,000, or if more than 80% of your tax was already deducted at source, for example through PAYE.
Limited companies
Companies that are not "large" must usually pay Corporation Tax 9 months and 1 day after the end of their accounting period.
Making Tax Digital for Income Tax
Making Tax Digital for Income Tax applies from 6 April 2026 to sole traders and landlords with qualifying income over £50,000. It requires quarterly digital updates to HMRC. Under current rules, it does not change when tax is paid, so the quarterly updates are not quarterly tax payments.
HMRC's guidance says you will need to use it from 6 April 2027 if your qualifying income is over £30,000, and from 6 April 2028 if it is over £20,000.
Important dates, thresholds and figures
| Item | Date or figure |
|---|---|
| 2025/26 balancing payment (Self Assessment) | 31 January 2027 |
| Payment on account (first) for 2026/27 | 31 January 2027 |
| Payment on account (second) for 2026/27 | 31 July 2027 |
| 2026/27 balancing payment | 31 January 2028 |
| Payments on account not required | Last bill under £1,000, or over 80% deducted at source |
| Corporation Tax (non-large company) | 9 months and 1 day after period end |
| "Large" company threshold | Broadly £1.5 million taxable profits, adjusted for associated companies |
| MTD for Income Tax | Over £50,000 from 6 April 2026; over £30,000 from 6 April 2027; over £20,000 from 6 April 2028 |
| Smaller, more regular payments on account | Announced from April 2029; frequency not yet decided |
Worked example
This is a simplified illustration using round numbers. It ignores other income, and assumes the first payments on account are required.
Suppose a sole trader's 2025/26 Self Assessment bill is £6,000, and it is her first year of payments on account. On 31 January 2027 she pays the £6,000 balancing payment, plus a first payment on account for 2026/27 of £3,000 (half of £6,000). That is £9,000 in one go. The second payment on account of £3,000 follows on 31 July 2027.
If her 2026/27 bill turns out to be £6,000, the payments on account cover it fully and no balancing payment is due on 31 January 2028. If it is higher, she pays the difference then. If it is lower, she gets a refund of the overpayment.
This is why many people feel tax is paid "early" already: the January bill can include both last year's balance and the first advance payment.
Common mistakes
- Confusing MTD quarterly updates with quarterly tax payments. Under current rules they are separate things.
- Forgetting the January double hit. The balancing payment and first payment on account land together.
- Treating proposals as law. News stories about possible changes are not rules until legislated.
- Not setting money aside. Spending profits before tax is accounted for is a common cause of cash-flow stress.
- Ignoring a falling income. If profits drop, you may be able to ask HMRC to reduce payments on account. Check the GOV.UK guidance first.
Frequently asked questions
Do I have to pay tax quarterly now?
Not as a small business, sole trader or landlord. Under current law there is no in-year or quarterly tax payment requirement for you. Large companies are the exception for Corporation Tax.
Does Making Tax Digital change when I pay?
No. Under current rules, it changes how you keep records and report, not when tax is due.
Could the rules change in future?
Yes, a change has been announced. From April 2029, people who make payments on account are due to make smaller, more regular payments during the year. The details, including how often, are still being decided. Until then, the dates above apply.
How much should I set aside for tax?
There is no official rule. Setting aside a portion of income in a separate account is practical cash-flow advice. The right percentage depends on your profits and circumstances, so it is worth asking your accountant.
Practical next steps
- Check your 31 January 2027 Self Assessment amounts, including any payment on account.
- Open a separate savings account for tax and move money into it regularly.
- Keep your bookkeeping up to date so you can estimate your bill throughout the year.
- Check whether MTD for Income Tax applies to you now or from April 2027 or 2028.
- Keep an eye on the April 2029 payments on account change, as HMRC is due to publish more detail in 2027.
How 360 Accounts can help
We can help you estimate your tax bill, plan for payment dates, keep your bookkeeping tidy and prepare for Making Tax Digital. If you would like a conversation about your own figures, we are happy to talk it through.
Official references
- GOV.UK: Self Assessment tax returns and payments, https://www.gov.uk/self-assessment-tax-returns
- GOV.UK: Understand how to pay Corporation Tax, https://www.gov.uk/corporation-tax
- GOV.UK: Find out if and when you need to use Making Tax Digital for Income Tax, https://www.gov.uk/guidance/find-out-if-and-when-you-need-to-use-making-tax-digital-for-income-tax
- GOV.UK: Timely payments in Income Tax Self Assessment factsheet (28 October 2026), https://www.gov.uk/government/publications/fiscal-events-2026-factsheets/timely-payments-in-income-tax-self-assessment-factsheet--2