Two HMRC reforms are reshaping tax for the self-employed at the same time, and it’s easy for sole traders to mix them up. Here we break them down
If you’re self-employed and feel like HMRC has announced one too many tax overhauls this year, you’re not imagining it. Two live reforms, Making Tax Digital and the Timely Payment Plan consultation, are often confused for one another, even by the sole traders they affect. They’re both related to your tax situation, but legally and administratively distinct.
Making Tax Digital: how and when you report income
Making Tax Digital, or MTD, changes the reporting process, not the payment dates.
- It replaces the single annual Self Assessment return with digital record-keeping, four quarterly updates, and a final year-end declaration.
- It’s rolling out by income threshold: over £50,000 from April 2026, over £30,000 from April 2027, and over £20,000 from April 2028.
- Tax payment deadlines stay exactly the same as now; that includes the 31 January balancing payment, plus payments on account. MTD governs what you submit and how often, NOT when you pay.
MTD is already law and actively rolling out now, with the first affected sole traders already filing quarterly updates. Those who did not submit their update will be receiving a letter from HMRC, as previously reported by The Freelance Informer.
Timely Payment consultation: when & how you actually pay tax
HMRC’s Timely Payment consultation is a separate proposal about moving the payment of tax closer to when income is earned, rather than the current lump-sum system.
For self-employed people who also have PAYE income, this could mean tax is deducted automatically through payroll as they earn.
For those without PAYE income, it would mean more frequent in-year payments, likely monthly or quarterly, instead of the current twice-yearly Self-Assessment payments.
It’s still only a consultation. It closed on 4 August 2026, the government’s response is due in Autumn 2026, and any change wouldn’t take effect until April 2029 at the earliest.
The simplest way to remember the difference
- MTD = tell HMRC about your money more often
- Timely Payment = hand HMRC your money more often
Why the confusion matters
Both reforms push self-employed people toward a more continuous, PAYE-like relationship with HMRC, which is exactly why they get muddled. But confusing “quarterly reporting” with “quarterly payment” leads sole traders to over- or under-estimate what’s actually required of them right now. One reform is confirmed and already live, the other is still a proposal years away from taking effect.
Frequently asked questions
Is Making Tax Digital the same as paying tax more often?
No. MTD changes how often you report income to HMRC, not how often you pay it. Payment deadlines are unchanged under MTD.
Does the Timely Payment consultation affect anyone yet?
Not directly. It closed for responses on 4 August 2026, with a government decision expected in Autumn 2026 and any implementation from April 2029 at the earliest.
Which reform is definitely happening?
Making Tax Digital is already law and is rolling out in stages from April 2026. The Timely Payment proposals are not yet confirmed policy.
Could both reforms end up applying to the same person?
Yes. Someone already filing quarterly updates under MTD could, in future, also see their payment schedule change under Timely Payment.
