HMRC is consulting on moving Income Tax Self Assessment payments closer to when income is earned. From April 2029, an estimated 2.1 million self-employed and landlord taxpayers with PAYE income could have part of their tax collected monthly, in equal instalments of 8.3 percent.
TL;DR · LAST REVIEWED 14 July 2026
- The "Timely Payments in Income Tax Self Assessment" consultation runs from 23 June to 4 August 2026.
- Nothing changes before April 2029 at the earliest; no current Self Assessment taxpayer needs to act yet.
- The first proposal affects ITSA taxpayers who also have PAYE income (a job or a private pension), collecting part of their forecast tax through their tax code.
- HMRC estimates around 2.1 million of the UK's 12 million Self Assessment filers fall into this group.
- A second proposal would move other Self Assessment taxpayers, such as sole traders and landlords without PAYE income, from two payments on account a year to more frequent monthly or quarterly instalments.
- Any deduction taken through PAYE would be capped at 50 percent of PAYE income in a single pay period.
KEY FACTS
- Consultation window: 23 June to 4 August 2026
- Earliest implementation: April 2029
- Affected (PAYE + ITSA group): ~2.1 million of 12 million Self Assessment filers
- Monthly PAYE deduction rate: 8.3% of forecast liability per month
- Proposed PAYE deduction cap: 50% of PAYE income per pay period
- Other Self Assessment filers without PAYE income: ~9.5 million, of whom ~2.5 million already pay by payments on account
What HMRC is consulting on
HM Revenue and Customs has opened a consultation on what it is calling "timely payments," a proposal that would move Income Tax Self Assessment (ITSA) bills much closer to the point at which income is actually earned. The consultation, "Timely Payments in Income Tax Self Assessment," runs for six weeks from 23 June to 4 August 2026. It sits alongside the wider Making Tax Digital programme, under which increasing numbers of self-employed people and landlords are already required to keep digital records and submit quarterly updates. HMRC says the aim of the reform is to smooth tax payments across the year rather than leaving taxpayers with a single large bill each January, reducing the risk of taxpayers falling behind and building up debt. The government has been clear that this is about timing, not the total amount of tax owed: officials say no one will pay more tax overall, only earlier and in smaller, more frequent amounts.
How the PAYE deduction would work
The consultation sets out two related sets of changes, both due to take effect from April 2029 if confirmed. The first affects Self Assessment taxpayers who also receive income through PAYE, for example from a job or a private pension, alongside self-employment profits, rental income, dividends, or savings. HMRC estimates that around 2.1 million of the UK's 12 million Self Assessment filers fall into this group. For these taxpayers, HMRC would forecast their Self Assessment liability based on the last tax return filed, then collect part of that forecast through their tax code in 12 equal monthly instalments, each worth 8.3 percent of the forecast bill. A balancing payment or refund would still be made in January once the actual Self Assessment return is completed, in the same way payments on account are reconciled today. To protect taxpayers from very large deductions in a single pay period, the government is proposing a cap so that no more than 50 percent of PAYE income could be taken through this route in any one pay period.
The second group: sole traders and landlords
The second group covers roughly 9.5 million Self Assessment filers who do not have enough PAYE income for HMRC to collect tax this way, including many sole traders, partners, and landlords whose income is not taxed at source. Of this group, around 2.5 million already make payments on account twice a year, in January and July. The consultation asks whether these direct payments should instead be made monthly or quarterly, spreading the same overall bill across more, smaller instalments rather than two large ones. HMRC argues that more frequent payments, informed by the more up-to-date records already being generated under Making Tax Digital, should make cash flow easier to manage and reduce the number of taxpayers who fall into arrears. Accountants have cautioned that the change could still create difficulties for anyone whose income varies significantly from year to year, since forecasts would initially be based on a tax return for a year that may have already ended some time before.
What to do before the consultation closes
Nothing in the consultation is confirmed, and no taxpayer needs to change how they pay tax today. If the proposals go ahead broadly as set out, the earliest any taxpayer would see a change to their payment pattern is the 2029 to 2030 tax year, with the government due to publish its formal response in autumn 2026 and any legislation following in a future Finance Bill. In the meantime, self-employed taxpayers and landlords who want to prepare can keep more accurate, up-to-date financial records so any future forecast is more likely to reflect real income, and can consider filing tax returns earlier in the year to leave more time to plan for a bill. Anyone wanting to respond to the consultation directly can do so through HMRC's online form, or by writing to the Timely Payment Team at HMRC's Manchester office, before the 4 August 2026 deadline.
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DISCLAIMER
This article is editorial information, not financial advice. Kael Tripton Ltd is not authorised or regulated by the Financial Conduct Authority. Figures were correct at the last review date shown above; verify current rates and rules with the primary sources listed below before acting.
Frequently asked questions
Will self-employed people have to pay tax monthly from 2026?
No. The proposals are still at consultation stage and, if confirmed, would not take effect before April 2029.
Who would be affected by HMRC's timely payments proposal?
The first change affects Self Assessment taxpayers who also have PAYE income, around 2.1 million people. The second affects other Self Assessment filers, such as sole traders and landlords, who could move from twice-yearly to monthly or quarterly payments on account.
Will I pay more tax overall under the new system?
HMRC says the total tax owed would not change, only the timing and frequency of payments.
How would HMRC calculate my monthly payment?
Payments would be forecast from your last filed Self Assessment return, with taxpayers able to update the forecast if their income changes.
When does the consultation close and how do I respond?
The consultation closes on 4 August 2026. Responses can be submitted using HMRC's online form or sent to its Timely Payment Team.
SOURCES
- GOV.UK -- Timely Payments in Income Tax Self Assessment (ITSA) – accessed 14 July 2026
