HMRC has not confirmed monthly tax bills for every self-employed worker. A new consultation is examining whether sole traders, freelancers, landlords and other Income Tax Self Assessment taxpayers should make smaller, more frequent payments instead of relying mainly on January and July deadlines.
A separate reform has already been announced for April 2029. Taxpayers with both Self Assessment liabilities and sufficient PAYE income will be required to make forecast payments through their employment or pension tax code.
Monthly or quarterly direct payments for taxpayers without sufficient PAYE income remain under consideration and have not been finalised.
The consultation opened on 23 June 2026 and closes on 4 August 2026. Current Self Assessment payment rules continue to apply unless legislation and updated guidance introduce a different system.
Key Points at a Glance:
| Issue | Position on 14 July 2026 |
| Monthly bills for every self-employed person | Not confirmed |
| PAYE collection of forecast Self Assessment tax | Announced from April 2029 for qualifying taxpayers |
| Monthly or quarterly direct payments | Consultation options |
| January and July payments on account | Current rules still apply |
| New tax rate for self-employed people | Not proposed |
| Consultation deadline | 4 August 2026 |
| Expected government response | Autumn 2026 |
The central distinction is that PAYE-linked payments are an announced policy, while wider changes for sole traders and landlords remain proposals.
What Is HMRC’s Consultation on Monthly Tax Bills for the Self-Employed?
The consultation considers how Income Tax Self Assessment payments could be collected closer to when income is earned.
The full timely payments consultation covers two connected but legally distinct areas, implementing the announced April 2029 reform for taxpayers with PAYE income and exploring more timely direct payments for other Self Assessment taxpayers. It also asks about payment frequency, forecasting, safeguards, transitional support and guidance.
What the Consultation Cover?
- Implementing forecast Self Assessment payments through PAYE from April 2029.
- Exploring monthly, quarterly or other direct payment schedules.
- Protecting taxpayers with fluctuating or seasonal income.
- Supporting employers, pension providers, agents and taxpayers.
- Managing the transition from existing payment dates.
- Considering whether the current £1,000 payment-on-account threshold remains appropriate.
The six-week consultation is led by Helen Derbyshire and Alasdair Hawkins. Responses can be submitted through the consultation form or emailed to timelypayment@hmrc.gov.uk by 4 August 2026, and the government expects to publish its response in autumn 2026.
Has HMRC Confirmed Monthly Tax Bills for All Self-Employed Workers?
No. Compulsory monthly direct payments have not been confirmed for all self-employed people.
From April 2029, Self Assessment taxpayers with enough PAYE income will be required to make forecast payments through PAYE each payday.
The forecast will generally use the most recently filed tax return, although taxpayers should be able to update it when their expected liability changes. Approximately 2.1 million people are currently expected to meet the PAYE-income criteria.
For taxpayers without sufficient PAYE income, the government is exploring monthly or quarterly payments on account from April 2029. It has explicitly stated that no decisions have yet been made about changes for this group.
An official factsheet states:
“No one will pay more tax than they currently do, the timing will just change.” This means the reform is not intended to create an additional tax liability, although paying sooner could still affect business cash flow.
How Do Self-Employed Tax Payments Work Under the Current Rules?
Payments on account normally divide an estimated future Self Assessment liability into two instalments.
Payments on Account Under Current Rules
Payments on account contribute towards the next tax bill, including Class 4 National Insurance for self-employed taxpayers. Each payment is usually half the previous year’s relevant tax liability and must be paid by midnight on 31 January and 31 July.
The two payments are generally not required when the previous year’s tax was below £1,000 or when more than 80% was collected outside Self Assessment, such as through a tax code.
The taxpayer’s statement or online account shows whether payments are due and their amounts. The official Self Assessment payment guidance provides the current calculation rules.
Why Are January and July Important?
The first payment on account is due on 31 January and the second on 31 July. A balancing payment is also due by midnight on 31 January following the relevant tax year when the two instalments do not cover the final liability.
A balancing payment is calculated by subtracting payments already made from the total tax due. The January amount can also include Capital Gains Tax or student loan liabilities where applicable to a self-employed taxpayer. If actual earnings are lower than estimated, a refund may be available or future payments may be reduced.
Balancing Payments, Refunds and Worked Figures
Where payments on account were made previously, a £3,000 bill for 2023–24 could follow this pattern, two earlier payments of £900 on 31 January and 31 July 2024 produced £1,800 in total.
The amount due by 31 January 2025 would then be a £1,200 balancing payment plus a £1,500 first payment towards 2024–25, producing a total January payment of £2,700.
A second £1,500 payment would follow on 31 July 2025, if the 2024–25 bill exceeded £3,000, another balancing payment would be due by 31 January 2026.
For a first-time filer who made no earlier payments on account, a £3,000 bill for 2023–24 would produce £4,500 due by 31 January 2025: the full £3,000 liability plus a £1,500 first payment towards 2024–25.
Another £1,500 would be due on 31 July 2025. If the following bill exceeded £3,000, a balancing payment and the next first payment on account would be due on 31 January 2026; if it were exactly £3,000, only the first payment for the following year would be required then.
Why Is HMRC Considering Monthly or Quarterly Tax Payments?
The government believes more frequent payments could reduce bill shock, late payment and tax debt.
Reasons given for considering reform:
- Tax may currently be paid up to 22 months after the related income is received.
- Large January payments can be difficult to budget for.
- New taxpayers may face their full first bill and an advance payment together.
- Smaller instalments may align tax more closely with taxable activity.
- Around one in five Self Assessment payments, including balancing payments, are not paid on time.
- Approximately 1.1 million payments on account were missed in January 2025, with tax debt arising in 75% of those cases.
The policy case is therefore based on budgeting and compliance, but earlier payment also means businesses may have less working capital available before the existing deadlines.
Who Could Be Affected by the Proposed Self Assessment Changes?
The effect depends mainly on a taxpayer’s income sources and whether sufficient PAYE income is available.
Sole Traders, Freelancers and Landlords
Potentially affected groups include full-time sole traders, freelancers, contractors, private landlords, people with property and self-employment income, and new or returning Self Assessment taxpayers. Those without sufficient PAYE income are most relevant to the possible reform of direct payments on account.
The consultation also considers taxpayers below the current £1,000 threshold, people with more than 80% of tax deducted at source, tax agents and individuals receiving means-tested support. Any wider scope remains undecided.
Could PAYE Taxpayers Be Treated Differently?
A person with employment or pension income alongside self-employment or rental income could have forecast Self Assessment tax collected through an adjusted PAYE code from April 2029. If PAYE income later becomes insufficient, collection may move back to direct payments, if circumstances change again, the tax code may be updated.
The proposed design would limit the amount collected through PAYE and allow forecasts to be corrected. Taxpayers would still file a return and settle any remaining balance after the tax year.
How Could Monthly or Quarterly Self Assessment Payments Be Calculated?
Payments could be forecast from previous returns and adjusted when income or expected tax changes.
For PAYE-linked payments, the most recently completed return would normally provide the forecast. Equal amounts could then be collected through each payday, subject to available PAYE income and safeguards.
For direct payments, the consultation illustrates either 12 monthly instalments between 6 April and 5 April or four quarterly payments, potentially in April, July, October and January. These examples are not final rules or payment choices available today.
Taxpayers with falling, rising or seasonal income would need an efficient way to revise forecasts. After the annual return is filed, payments would be reconciled with the actual liability, producing either a balancing payment or a repayment.
New businesses present a particular forecasting challenge because they may lack a previous return or stable profit history.
What Could the Proposals Mean for Cash Flow and Tax Planning?
Smaller instalments may improve budgeting, but earlier collection could reduce available cash.
Potential Budgeting Benefits
More regular payments could reduce dependence on two large deadlines, lower the risk of spending funds reserved for tax and make liabilities feel more predictable. Voluntary weekly or monthly Budget Payment Plans are already available to taxpayers who are up to date, but these do not replace current statutory deadlines.
What Risks Could Seasonal Businesses Face?
A fixed forecast may not reflect delayed invoices, seasonal sales, unexpected property costs or changing contracts. Some taxpayers could be required to pay before receiving the associated income, even though the taxable activity has occurred.
The consultation recognises that these effects could be more severe for seasonal or irregular businesses. Accurate updates, accessible support and prompt repayment systems would therefore be important safeguards.
Transitional Safeguards Under Discussion
During 2029–30, affected taxpayers could pay liabilities under the old schedule while also beginning payments for the current year. Options under discussion include voluntary advance payments and spreading an existing July payment across four, six or 12 months.
Other issues include flexible forecasts, support for new businesses, assistance for digitally excluded taxpayers and guidance for agents, employers and pension providers. No transitional package has been finalised.
Is the Consultation the Same as Making Tax Digital for Income Tax?
No. Making Tax Digital changes record-keeping and reporting; the consultation concerns payment timing.
A sole trader or landlord generally enters Making Tax Digital when registered for Self Assessment, receiving self-employment or property income, and exceeding the relevant qualifying-income threshold. The Making Tax Digital eligibility guidance confirms the phased dates.
Reporting and Payment Compared
| Requirement | Main Purpose | Key Dates or Thresholds |
| Making Tax Digital | Digital records and regular income reporting | Over £50,000 from 6 April 2026; over £30,000 from 6 April 2027; over £20,000 from 6 April 2028 |
| Timely payment reform | Changing when forecast tax is collected | PAYE-linked reform from April 2029; direct payment reform remains under consultation |
A taxpayer does not need to start Making Tax Digital until after submitting a first Self Assessment return. Partnerships will enter later, but their timetable has not yet been set. Digital exclusion can support an exemption, although exempt taxpayers must continue reporting income and gains through Self Assessment.
The eligibility tool checks whether the service is required, the start date and possible exemption, and it can be used for someone else.
For tax years ending 5 April 2025, 5 April 2026 and 5 April 2027, taxpayers should consider whether a return is required, the income sources to declare and expected self-employment or property income.
Those in scope should choose and authorise suitable software or agree how an agent will act. HMRC reviews qualifying income each year and normally writes to those above the threshold, but taxpayers remain responsible for checking even if no letter arrives; they may use the checking tool or seek help from an agent, relative or friend.
What Should Self-Employed Taxpayers Do Before a Decision Is Made?
They should continue following current rules and monitor the consultation outcome.
Practical next steps:
- Pay existing January and July liabilities by their current deadlines.
- Check the online statement for payments on account and balances.
- Review whether income comes through both PAYE and Self Assessment.
- Maintain accurate income, expense and cash-flow records.
- Check Making Tax Digital eligibility independently.
- Consider how earlier payments could affect working capital.
- Update payments on account when a genuine fall in liability is expected.
- Respond to the consultation by 4 August 2026 where relevant.
- Seek qualified advice for individual tax or legal circumstances.
A consultation does not itself create a new payment obligation, so taxpayers should not change their statutory payment schedule solely because of a news headline.
Conclusion
The monthly tax bills self-employed consultation could significantly change when sole traders, landlords and freelancers pay Income Tax, but universal monthly payments have not been confirmed.
The April 2029 PAYE-linked reform is announced policy for taxpayers with sufficient PAYE income. Monthly or quarterly direct payments for other taxpayers remain under consultation, while existing January and July rules continue to apply.
FAQs
Can Self-Employed People Already Pay Monthly Voluntarily?
Yes. Taxpayers who are up to date may use a Budget Payment Plan to make weekly or monthly Direct Debit payments towards a future bill, but any remaining balance must still be paid by the statutory deadline.
Would The Proposals Change Self-Employed Tax Rates?
No new self-employed tax rate is proposed. The announced reform changes payment timing rather than the total liability, although earlier collection could affect cash flow.
What Happens If A Forecast Is Too High?
The proposed system would allow taxpayers to update forecasts when expected income or tax changes. Final figures would be reconciled after the return is submitted.
Could Balancing Payments Still Be Required?
Yes. A balancing payment could remain due when instalments are lower than the final liability, while an overpayment could result in a refund.
Would An Annual Tax Return Still Be Required?
Yes. The consultation assumes that taxpayers will continue filing annual returns so forecast payments can be compared with the actual liability.
How Could New Businesses Be Treated?
The government is seeking views because new businesses may have no previous return or stable income history. Possible support and forecasting methods remain undecided.
When Will The Consultation Result Be Published?
Responses close on 4 August 2026, and a government summary is expected in autumn 2026. Relevant legislation for the announced PAYE reform would be introduced before April 2029.