Millions of taxpayers could soon have to pay their tax earlier

CREATED BY ROGER EDDOWES Published: 16/07/2026 @ 09:00AM #HMRC #SelfAssessment #Tax #Deadlines #CashFlow #Taxpayers

Millions of taxpayers could pay their tax earlier under HMRC's proposed self-assessment changes. The move may smooth tax deadlines, but it could also tighten cash flow. For many, the real issue will be how quickly the system adjusts ...

British taxpayers may face earlier tax payments as millions are expected to pay tax earlier under new regulations

HMRC is considering a major shift that could mean many people pay tax earlier, and the change is likely to matter most to those who already juggle self-assessment alongside PAYE income. I think the idea is simple on paper: collect tax closer to when the money is earned, rather than waiting for the usual year-end bill.

In practice, that could mean a very different rhythm
for taxpayers and their cash flow!

The way I see it, the government's thinking is built around a familiar complaint: too many people leave tax deadlines until the last minute, and too many bills arrive as a surprise. By asking more taxpayers to pay tax earlier, HMRC hopes to reduce arrears and make changes to tax payments feel more manageable throughout the year.

I think this is a neat policy aim, but the figures suggest the change could affect millions of people, and not in a positive way.

For employees and pensioners who also have untaxed income, the proposal is especially significant. Instead of one large self-assessment bill at the end of the tax year, more of that liability could be collected during the year through PAYE. That would spread the cost, but it would also mean less take-home pay each month.

For landlords and sole traders, the direction of travel
is similar, even if the mechanism is different!

The government is exploring earlier direct payments during the year, which could replace the current pattern of waiting until January and July. In effect, that means a growing number of taxpayers may need to pay tax earlier, whether they receive income through employment, property, or a business. The logic is that regular payments should be easier to plan for than a single large bill.

From what I've seen of the proposals, the interesting part is not just the timing, but the forecast itself.

Under the proposed system, HMRC would base instalments on previous returns and allow updates when circumstances change. That sounds sensible, because life rarely sticks to a neat estimate. Still, if earnings fall, rise, or vary sharply, taxpayers could find themselves overpaying or underpaying unless the system is responsive enough to keep pace.

There is also a wider economic angle!

Small changes in tax timing can have big effects on household spending, especially for people with uneven incomes. If the rules encourage more taxpayers to pay tax earlier, the government will need to ensure the process is clear, flexible, and well signposted. Otherwise, I believe any reforms could create confusion just as easily as they create certainty.

The transitional year may be the hardest part. If taxpayers have to deal with one year's tax and the start of the next under different rules, the pressure on budgets could be severe.

That is why the consultation is likely to focus heavily on safeguards, timing, and whether the current limits are still suitable. The goal may be better collection, but the details will decide whether the change feels fair.

For now, I think the message is straightforward: the era of waiting until long after the tax year may be ending for many people. If HMRC gets its way, more taxpayers will need to pay tax earlier.

And that will change how self-assessment, cash flow, and tax deadlines all fit together.

Until next time ...

ROGER EDDOWES
Join our mailing list! Click here and be one of the first to know when we publish a new blog post!

Share the blog love ...

Buffer Facebook Twitter Linkedin Pinterest WhatsApp #HMRC #SelfAssessment #Tax #Deadlines #CashFlow #Taxpayers

About Roger Eddowes ...
Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach. Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.

More blog posts for you to enjoy ...
		Self employed taxpayers warned about class 2 NIC record errors HMRC has spotted errors in Class 2 NIC records affecting some self-employed people who did not register properly. The good news is that fixes are being rolled out, and some taxpayers may be able to top up gaps later. It is wo...
		Andy Burnham's tax plans: what could they mean for businesses and taxpayers? With Andy Burnham declaring himself 'ready' to lead the country, attention has naturally turned to what a Burnham government might mean for the UK's tax system ......
		How the recent heatwaves have cost businesses billions The record-breaking June heatwave was more than just a talking point. According to new research from the London School of Economics (LSE), the exceptionally high temperatures led to an estimated 24 million lost working hours,...
		HMRC's mandatory direct debit for VAT and PAYE plans explained Mandatory direct debit for VAT and PAYE could soon become the norm for most businesses. The plan aims to improve collections and reduce errors, but it may create headaches for some businesses, especially those using other pay...
		Are you thinking of employing young workers this summer? The summer holidays are a popular time for young people to gain their first work experience, and many businesses welcome the extra help during their busiest months ......
		Why Artificial Intelligence is changing recruitment Artificial intelligence is no longer something businesses are simply experimenting with, and it is rapidly becoming part of everyday life, especially in recruitment. The latest AI hiring trends suggest that this shift will on...
		Growing our team to support yours At Essendon, we believe that good accounting is about more than numbers. It's about giving business owners confidence that everything is organised, properly handled, and under control ......
		Rising labour costs, energy bills and late payments are holding businesses back This pressure is feeding straight into weaker cash flow and tighter margins for everyone. Businesses are finding it harder to plan, price and grow when expenses keep climbing faster than demand. It is a messy combination, and...

Other bloggers you may like ...
		Could your everyday shopping pay your household bills? Posted by Davina Farrer on https://blog.joindavina.co.uk What if the money you already spend every week could start helping to pay your household bills? It sounds a little too good to be true, but sometimes ...
		Fraud, Fraud, Fraud! What's The Cost To Your Business? Posted by Pritesh Ganatra on https://blog.btsuk.net Did you know that small and medium-sized enterprises (SMEs) account for 99.9% of the businesses in the UK? At the start of 2023, there were estimated ...
		How trusted contacts help you stay independent for longer Posted by Steffi Lewis on https://www.yourping.uk For many people, staying independent is incredibly important. Whether you live alone, have family who live some distance away, or simply value your pr ...
		MTD For Self Assessment: Don't panic if you missed the first deadline Posted by Alison Mead on https://blog.siliconbullet.com If you've recently discovered that the first Making Tax Digital (MTD) for Income Tax quarterly submission deadline has passed, don't panic. The first ...