Taxpayers who file under Income Tax Self Assessment (ITSA) should brace for a change to when they pay their tax bill, according to Lee Blunden of Clemence Hoar Cummings.
Lee’s message comes following new Government proposals that would see Income Tax liabilities collected earlier in the year rather than largely after it.
Under Tax Update 2026, HMRC has set out two related changes that would take effect from April 2029.
Taxpayers with a PAYE source of income, such as employment or a private pension, would have more of their forecast ITSA liability collected in-year through their tax code, in 12 monthly instalments worth 8.3 per cent each.
A balancing payment would then follow the next January. HMRC estimates the change would affect around 2.1 million of the 12 million people currently within ITSA.
Separately, the Government is looking at how payments on account are made, with a possible shift from the current twice-yearly structure to monthly or quarterly instalments.
The £1,000 threshold that determines who needs to make payments on account could also come down, bringing more taxpayers into scope.
Ministers say the aim is to cut the number of people falling into tax debt, pointing to figures showing around one in five ITSA bills are currently paid late.
Asked how taxpayers are likely to react, Lee was very clear: “I would think most will be unhappy about paying tax earlier than they previously did.”
He expects smaller sole trader businesses to bear the brunt of the change.
“Small owner-managed businesses and self-employed individuals who have gotten used to the current payment schedule are likely to feel the impact most,” he said.
There are also questions, in Lee’s view, about how the proposals square with the original case for Making Tax Digital.
“MTD was originally introduced to modernise record keeping and not to change when the tax is paid,” he said. “This is a departure from what was originally proposed, which taxpayers will have to adjust to.”
That said, Lee believes the change could work in favour of some taxpayers, particularly those newer to self-employment.
“Especially those who are new to being self-employed and struggle to find the money to pay tax in one big instalment at the end of the year,” he explained.
“Small businesses are often managing the most urgent need, so paying more regularly will help them keep on top of this.”
He also expects the proposals to influence how clients approach tax planning throughout the year.
“Timing of dividends may change and clients may have more of an interest in getting up-to-date accounting information to help them plan ahead,” he said. Lee says that the current Making Tax Digital system and its requirements to use accounting software may help.
For now, Lee’s advice to taxpayers is to stay calm but start preparing: “There is no need to panic immediately, but taxpayers should start establishing good habits now to increase preparedness.
“Consider keeping a tax reserve in a separate account, keeping records up to date and regularly monitoring profitability,” he added.
The consultation of ITSA payments closes on 4 August 2026 and nothing has yet been confirmed, but Clemence Hoar Cummings advises watching this space.