Government Consults on Monthly Tax Bills for the Self-Employed — What It Could Mean for You

The government has been consulting on a proposal that would shift millions of self-employed workers, freelancers, and landlords away from the current twice-a-year Self Assessment payment structure and toward monthly tax payments — a change that, if it goes ahead, would be one of the biggest shifts to how the self-employed pay tax in decades.

What's being proposed

A consultation document published on 23 June 2026 sets out the government's thinking on moving self-employed taxpayers onto a monthly payment cycle, closer to how PAYE employees have tax deducted from every payslip. The consultation window closed on 4 August 2026, and if the government decides to proceed, the new system could come into effect from April 2029 — giving a long lead-in time for software providers, accountants, and taxpayers to adjust.

Why this is being considered

Currently, most self-employed people pay tax through Self Assessment: a balancing payment by 31 January following the end of the tax year, plus two payments on account (31 January and 31 July) toward the following year's estimated bill. For many people this means a single, large payment landing at the end of January that can be difficult to budget for, especially if income has been irregular through the year. HMRC's stated rationale for exploring monthly payments is to smooth this out, reduce the number of people falling into debt with large lump-sum tax bills, and align more closely with the ongoing rollout of Making Tax Digital for Income Tax, which already requires quarterly digital updates for many self-employed people and landlords earning over £50,000.

Who would be affected

If implemented, this would apply to the same broad population currently in or approaching Making Tax Digital for Income Tax: sole traders and landlords with combined self-employment and property income currently over £50,000 (falling to £30,000 from April 2027 and £20,000 from April 2028). Nothing has been decided yet, and the consultation stage is just the government gathering views before any legislation is drafted.

Checklist: how to prepare either way

• Don't panic — this is a consultation, not a confirmed policy change, and any implementation is at least three years away.
• If you're already in Making Tax Digital for Income Tax, keep your quarterly updates current — the infrastructure for more frequent reporting is already being built regardless of whether payments move to monthly.
• Build the habit of setting aside a percentage of every invoice for tax now, rather than waiting for policy to force the issue — most accountants suggest 20–30% depending on your income level and whether you're VAT-registered.
• Keep a cash buffer for your January and July Self Assessment payments under the current system, since that won't change in the short term.
• Watch for the government's response to the consultation, expected in the months following the 4 August 2026 closing date, and revisit your budgeting approach once (and if) a firm timeline is confirmed.

How this compares internationally

Monthly or near-monthly tax payment for the self-employed is already standard in several countries. In the US, self-employed taxpayers make quarterly estimated tax payments to the IRS throughout the year rather than one annual lump sum, and in Australia, sole traders can opt into the Pay As You Go instalment system, which spreads tax liability across the year based on recent income. A UK move to monthly payments would bring the system closer to these more frequent-payment models.

Key Numbers

• Consultation published: 23 June 2026
• Consultation closed: 4 August 2026
• Potential go-live date if implemented: April 2029
• Current MTD for Income Tax threshold: £50,000, falling to £30,000 in April 2027 and £20,000 in April 2028

Sources

• Monthly Tax Bills for the Self-Employed: What the Government's Plan Means for You — UK Tax Calculators
• Landlords and self-employed urged to get ready for Making Tax Digital — BDO
• Making Tax Digital for Sole Traders — mtd.digital
• IRS — estimated taxes for the self-employed

Educational content only — not financial advice.