In-year tax payments for sole traders: planning for HMRC’s new Self Assessment timeline
HMRC is consulting on moving some Self Assessment tax payments closer to when the income is earned. The proposal is called timely payments. Nothing has changed yet. The current consultation opened on 23 June 2026 and closes on 4 August 2026, with a government response expected in autumn 2026.
The earliest any new payment rules would start is April 2029. Until then, the usual Self Assessment deadlines still apply: 31 January for any balancing payment and first payment on account, and 31 July for the second payment on account.
The direction of travel is clear, though. HMRC wants records, reporting and payments to move closer to real time. You can already see that in Making Tax Digital for Income Tax, which became mandatory from 6 April 2026 for sole traders and landlords with qualifying income above £50,000. The threshold then falls to £30,000 from 6 April 2027 and £20,000 from 6 April 2028.
It is worth saying plainly: quarterly updates under MTD are about reporting, not paying. Quarterly updates are not quarterly tax bills. The timely payments consultation is the part that could change when the money leaves your account.
What HMRC is actually proposing
The timely payments consultation looks at 2 broad groups of Self Assessment taxpayers.
| Who you are | How it works now | What could change from April 2029 |
|---|---|---|
| Sole trader, landlord or other Self Assessment taxpayer with PAYE income, such as a job or pension | Balancing payments and payments on account are usually settled through the 31 January and 31 July system | Forecast Self Assessment tax could be collected in-year through your PAYE tax code, where there is enough PAYE income to collect it |
| Sole trader or landlord with Self Assessment income only | Payments on account are normally due on 31 January and 31 July, with any balancing payment due the following 31 January | HMRC is exploring more frequent direct payments on account, such as monthly or quarterly payments. No decision has been made yet |
| New or returning Self Assessment taxpayer | A first tax bill can arrive long after the income was earned | HMRC is asking how new traders could be supported to avoid large first-year tax bills |
| Taxpayer with seasonal or irregular income | Payments are generally based on the previous year’s liability | HMRC is considering how forecasts could be updated where income changes during the year |
The government says the change would not increase the total tax due. It would change the timing. That distinction matters. Paying the same bill earlier can still affect cash flow, savings, drawings and the amount you can safely take out of the business.
Need Expert Accounting Advice?
If you are unsure about tax, bookkeeping, payroll, property accounts or business finances, speak to the team at FHP Accounting for clear, practical guidance.
Why HMRC is pushing this
HMRC says there can currently be a delay of up to 22 months between income being earned and the tax being paid. It also says around one in five Income Tax Self Assessment bills are paid late. In January 2025, about 1.1 million payments on account were missed, with taxpayers falling into tax debt in 75% of those cases.
From HMRC’s point of view, collecting tax sooner and in smaller instalments may reduce debt and late payment problems. From your point of view, it could mean less shock in January, but more pressure to keep your records current during the year.
If you have more than one income source, this could matter more. A landlord who also freelances, or a director with several income streams, sits close to the area these proposals are aimed at. Our guide to personal tax returns with multiple income streams explains the return side, while our note on untaxed side earnings covers income HMRC expects to see declared.
What to do now
You do not need to change how you pay Self Assessment today. You should, however, start preparing for a system where estimates, records and payment planning matter more.
Keep your bookkeeping up to date instead of leaving everything until January. Set aside money for tax as income arrives. Review your likely profit during the year, especially if your income is seasonal. File early where possible, so you understand your bill sooner, as our article on filing your return early explains.
Interest is another reason to stay organised. Missing a payment can be expensive, as we set out in our guide to HMRC late payment interest. If keeping on top of this is becoming too much, an outsourced finance department can keep your bookkeeping and forecasting under control.
Where to get help
Newer traders may benefit from speaking to accountants for start-ups before habits become hard to change. Property investors should work with a landlord accountant who understands how rental profits feed into Self Assessment. If you run a property company, our residential property management accounting team can help keep the reporting side clean.
We are accountants in Nottingham who help sole traders and landlords stay ahead of tax changes. If you want to plan for the new Self Assessment timeline before it arrives, get in touch and we will map it out with you.
I lead FHP Accounting, an accountancy practice specialising in Commercial and Residential Property Accounting. Our goal is to make the administration of running property portfolios easier for landlords, managers, and investors — allowing you to focus on what you do best, while we take care of everything behind the scenes.
Need Expert Accounting Advice?
If you are unsure about tax, bookkeeping, payroll, property accounts or business finances, speak to the team at FHP Accounting for clear, practical guidance.
