HMRC wants self-employed people to pay their tax more regularly, not just twice a year. A new consultation asks how this should work. Here’s what it means for you and how to respond before the deadline
If you’re self-employed, the way you pay your tax could be about to change. The government has launched a consultation looking at “timely payments” for Income Tax Self Assessment, known as ITSA. It wants tax to be paid closer to when you actually earn the money.
Right now, most self-employed people pay tax in a lump sum, or in two payments on account each year. This new plan could spread that out further. For many, that might mean smaller, more frequent payments rather than one big bill.
What’s actually being proposed?
The consultation covers two main groups of taxpayers.
The first is people who have both employment income and self-employed income. From April 2029, these taxpayers may have to pay more of their forecasted Self Assessment tax through PAYE, in-year, rather than waiting until the following January.
The second, and arguably more relevant group for many readers, is other Self Assessment taxpayers. Here, the government is looking at reforming payments on account altogether. This is the system that already asks many self-employed people to pay tax in advance, based on estimates.
No firm changes have been confirmed yet for this second group. The consultation is genuinely exploring options, rather than announcing a done deal.
Why is this happening now?
The government says it wants tax payments to better reflect real-time income, rather than being based on last year’s figures. Supporters argue this could reduce large, unexpected bills. Critics may worry it puts more pressure on cash flow, especially for those with unpredictable earnings.
For self-employed people whose income varies month to month, this is a genuinely significant question. Freelancers, tradespeople, and small business owners could all be affected differently.
What should self-employed people be asking in the consultation?
If you plan to respond, it’s worth thinking through a few key points.
- How would payments be calculated if your income is irregular or seasonal?
- Will there be extra support for cash flow during the transition?
- What happens if you overpay based on a forecast that turns out too high?
- How will digital record-keeping and Making Tax Digital tie into this?
- Will there be a grace period or phased introduction for smaller businesses?
- How will refunds work if actual profits come in lower than expected?
These questions matter because the detail, not just the principle, will decide whether this system actually works for self-employed people.
How soon could this become law?
Unfortunately, the consultation closes on 4 August 2026, when most people are on summer holidays. After that, the government will usually publish a summary of responses.
Any changes would then likely need draft legislation, followed by a Finance Bill. That process typically takes many months, sometimes longer.
For the PAYE-income group, a start date of April 2029 has already been set. For other self-employed taxpayers, no implementation date has been confirmed. Given the scale of the changes being discussed, most experts would expect any wider rollout to take at least a couple of years to arrive.
What should you do now?
There’s no need to panic, and nothing changes immediately. However, it’s worth reading the consultation document and considering a response, especially if irregular income is part of your working life.
You can find the full consultation and details on how to respond, on the GOV.UK Timely Payments in Income Tax Self Assessment page.
This article covers proposals currently out for consultation. Nothing described here is yet confirmed law, and details may change before any final decision is made.
