In the recent Budget, the Government announced plans to introduce more frequent, in-year Self Assessment tax payments from April 2029.

Although presented as a way to make tax bills more manageable, the change could create significant cash-flow pressures, particularly for taxpayers with seasonal or unpredictable income, as well as extra admin pressure throughout the year.

These concerns were highlighted in responses to the Government’s consultation. 

What will change?

Taxpayers who make Self Assessment payments on account will be required to make smaller, more regular payments during the tax year in which they earn their income. Payments will be automated, for example by Direct Debit, though eligible taxpayers with sufficient employment or private pension income will be able to choose to pay through PAYE instead. 

How often payments will be made has not yet been finalised. Monthly and quarterly payments were considered during the consultation. Payments will continue to be based on the previous year’s tax liability, with taxpayers able to update their position online if circumstances change. 

Why could this be onerous?

Smaller instalments do not necessarily mean less financial pressure. Bringing payment dates forward could leave taxpayers with less money available to cover business costs and periods of lower income.

Responses to the Government’s consultation show concerns that more frequent payments could require tax to be paid before the related income has been received. Respondents also highlighted complexity and the importance of retaining control over payments, particularly where earnings fluctuate. 

Basing payments on the previous year’s liability could also mean taxpayers whose profits fall need to actively update their position to avoid paying more than their current circumstances justify. The ability to make adjustments as the year progresses will therefore be an important safeguard. 

A potentially difficult transition

The move to the new system could be particularly challenging in 2029–30. HMRC confirms that taxpayers will need to make their final payment for the previous tax year while also starting payments under the new arrangements. This overlap could place additional demands on tax reserves, even though the change is around the timing of payments rather than an increase in tax rates. 

What happens next?

Further details are expected later in 2027, including payment dates, safeguards, penalties and interest, and transitional arrangements. Until these are published, we can’t be entirely sure of the precise impact they will have. Our recommendation is therefore that all taxpayers build a buffer if at all possible to enable them to cope with the potential impact on their cash flow.

The Government argues that more regular payments will help taxpayers budget and reduce the risk of tax debt. However, the real effects will depend on how well the final rules take account of fluctuating income and the transition between systems. 

If you’re concerned about how earlier tax payments could affect your finances, please speak to your accountant, and ensure you keep up to date with the further announcements as they’re made.