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Taxed On Income Before It Lands: HMRC Consults On Making Some Self Assessment Payers Settle Income Tax In-Year From April 2029

ended 03. July 2026

One of the few pieces of breathing room in Self Assessment is time. You earn across the year and pay the tax later, which for many self-employed people is the only reason the bill is affordable when it finally lands. HMRC is now consulting on narrowing that gap. Its consultation, "Timely Payments in Income Tax Self Assessment", was published on 23 June 2026 and is open until 11:59pm on 4 August 2026. It proposes that from April 2029, people in Self Assessment who also have sufficient PAYE income would pay the forecast Income Tax on their other, non-PAYE income (such as self-employed profits) in-year through PAYE, rather than waiting until the following 31 January. The paper also revisits more frequent Payments on Account for other Self Assessment taxpayers.

The catch is that nothing about the amount of tax owed changes, only the timing. But timing is exactly what a lumpy self-employed income cannot always absorb, and being asked to pay tax on profit you have forecast but not yet banked is a cashflow question dressed as an administrative one. It follows the Autumn Budget 2025, and the government is due to respond in autumn 2026. This is a consultation proposal, not settled policy: it would take effect from April 2029 only if adopted. The person it would touch first is not the high earner with reserves, but the freelancer with a part-time PAYE job, or the sole trader whose income arrives in a few large invoices rather than a steady monthly wage.

  1. Is moving Self Assessment tax in-year a sensible modernisation that ends the January shock, or does it strip out the flexibility the self-employed rely on to pay at all?
  2. Who would feel this hardest, and is it fair to ask people to pay tax on income that is forecast rather than banked?
  3. What should self-employed clients with PAYE income be doing now, ahead of April 2029, to protect their cashflow? Do you have a client whose plans this would change? If so, please give as much colour and detail as possible.

4 responses from the Newspage community

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Harvey DhillonVerified
Founder & CEO at Zmartly
The wait between earning money and paying tax on it looks like a quirk of the calendar. For many self-employed people it is the only reason the bill is affordable when it lands. This consultation proposes closing that gap: from April 2029, if it goes ahead, those in Self Assessment who also have sufficient PAYE income would pay tax on their other, non-PAYE income in-year through PAYE, instead of the following 31 January. The amount owed does not change, only the timing, but a timing gap turned into an in-year charge is a cashflow tax on money you have not yet been paid. The one who feels it is the freelancer with lumpy invoices, not the steady high earner. So if that is you, do not wait for 2029: open a tax pot now and move a fixed share of each payment into it, so the cash is set aside before the rules change. Fair or not, assume tax is coming sooner. The gap that made your bill affordable is being closed.
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Tony RedondoVerified
Founder at Cosmos Currency Exchange
The UK is no longer a serious country for entrepreneurs. Framed as modernisation to end January bill shock, this proposal could only have been dreamt up by politicians and civil servants who've never worked in the private sector but always with the public sector's 'magic money tree' comfort. It strips away the informal, interest-free working capital buffer volatile businesses rely on. The sharpest hit falls not on high earners with reserves, but on hybrid workers, freelancers with part-time PAYE jobs and sole traders with pensions. Forcing monthly settlement based on forecasted rather than banked income creates a dangerous cashflow squeeze, especially in 2029, when taxpayers face trailing and in-year liabilities simultaneously. Affected individuals must build aggressive tax reserves now, adopt real-time bookkeeping to dispute inflated HMRC forecasts, consider incorporating to isolate side income from PAYE codes or simply emigrate to a country that still welcomes entrepreneurs.
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Philly PonniahVerified
Chartered Wealth Manager and Financial Coach at Philly Financial
This may look like an administrative tidy up, but it risks missing how many self-employed people actually earn their living. Cashflow is the lifeblood of a small business; entrepreneurs are often paid in unpredictable chunks rather than a regular salary and must wait weeks for invoices to be settled. Asking them to pay tax on forecast profits rather than cash received could create serious financial pressure. The current system gives business owners valuable time to build the funds needed to meet their tax bill. Bringing payments forward may reduce the January shock, but it may replace it with year-round cashflow problems. Policy should reflect the reality of running a business, not assume income arrives like a monthly payslip. If the govt wants to modernise Self Assessment, in-year payments must be based on cash received, not projected profits. Otherwise, entrepreneurs risk being forced to fund tax liabilities before they've been paid themselves—stifling investment, growth & confidence
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Nouran MoustafaVerified
Practice Principal & IFA at Roxton Wealth
The January tax bill is not a nuisance created by poor planning. For many self-employed people, it is the breathing space that allows them to trade through uneven months, pay suppliers and survive the gap between doing work and being paid for it.

Moving forecast tax into PAYE may look tidy on a Treasury spreadsheet, but cashflow is not tidy in real life. A freelancer can have a part-time PAYE job and one strong invoice in June, then nothing for months. Asking them to pay tax on an estimate before the money has landed risks turning a tax bill into an overdraft problem.

The danger is that government confuses more frequent collection with better compliance. It may smooth receipts for HMRC, but it can destabilise the people generating the income. Before 2029, clients should build a separate tax reserve, review cashflow monthly and challenge forecasts that do not reflect their actual pipeline. The self-employed do not need another system that assumes their income behaves like a salary.