Monthly Tax Bills Self Employed Consultation: How to Prepare
It’s the second week of January. Work has gone quiet after Christmas. Then the Self Assessment bill arrives, and it’s bigger than you hoped.
Thousands of Yorkshire sole traders know that feeling. HMRC now wants to change the whole rhythm. Its monthly tax bills self employed consultation for people could see tax leave your account every month from April 2029.
Most guides explain the policy. This one is different. It shows you how to get your money ready, step by step. We’ve built it from the questions our clients across Batley, Leeds and West Yorkshire keep asking us.
What the Monthly Tax Bills Self Employed Consultation Means for Workers
HMRC wants Self Assessment tax paid closer to when you earn the money. Today, the gap can be up to 22 months.
There are two parts to the plan. If you have a job or pension as well as your own income, HMRC will take your tax through your tax code from April 2029. That part is already decided.
If you only work for yourself, HMRC is looking at monthly or quarterly payments instead of two a year. That part is still a proposal.
The monthly tax bills self employed consultation closed on 4 August 2026. The government says it will publish its response this autumn. You can read every detail in HMRC’s Timely Payments in Income Tax Self Assessment consultation.
HMRC is clear on one point. You won’t owe more tax in total. You’ll just pay it sooner.
Which Group Are You In? A Quick Check
Before you plan anything, find your group. It takes about 30 seconds.
You Have a Job or Pension as Well as Your Own Business
Maybe you work at a Kirklees school and run a small online shop. Or you draw a private pension and do some consultancy.
You’re in the group with the firmest rules. From April 2029, the tax on your side income will likely come out of each payslip. HMRC expects around 2.1 million people to fall into this group.
HMRC can’t take more than 50% of your PAYE pay in one pay period. If your wages can’t cover it, you pay the rest directly.
You Only Work for Yourself
This covers most sole traders, freelancers and full-time landlords. HMRC is weighing up monthly or quarterly payments for you. Nothing is fixed yet.
If you already make payments on account each January and July, you’re the most likely to be affected. Around 2.5 million people do that today.
Your Tax Bill Is Under £1,000 a Year
Right now, you pay once a year in January. You don’t make payments on account.
That could change. HMRC is reviewing whether the £1,000 limit is still right. If it drops, smaller earners could be pulled into regular payments too.
Why Your Cash Flow Matters More Than Your Tax Bill
Here’s the part people miss. The new system won’t change how much tax you owe. It changes when the money leaves your bank. For most self-employed people, timing is the real problem.
The Overlap Year in Plain Numbers
Say your tax bill is £4,000 a year and stays steady. Under today’s rules, between April 2029 and March 2030 you’d pay:
£2,000 in July 2029
£2,000 in January 2030
That’s £4,000 in total.
Under the new system, the same 12 months could look like this:
£2,000 in July 2029, to finish off the old year
£333 a month from April 2029, adding up to £4,000
That’s £6,000 in total.
You’d need to find an extra £2,000 that year. Here’s a simple rule we give clients: in the overlap year, expect to pay around half your usual yearly bill on top.
HMRC admits this in its own paper. It calls it an “adjustment period”. It has floated ideas to soften it, such as spreading the July 2029 payment over several months. Nothing is promised yet.
The Problem With a Two-Year-Old Forecast
HMRC plans to base your payments on your last filed tax return. In April 2029, that will usually be your return for 2027 to 2028.
So your first monthly payments could reflect what you earned two years earlier. If your business has grown, you’ll underpay and face a January top-up. If it has shrunk, you’ll overpay until you ask HMRC to lower the amount.
You’ll be able to update your forecast. But you have to remember to do it.
Five Yorkshire Workers, Five Different Monthly Bills
These examples use 2026 to 2027 tax rates. Each one includes Income Tax and Class 4 National Insurance, unless we say otherwise. The figures are rounded, and they’re for guidance only.
A Bradford Taxi Driver With Steady Weekly Takings
Imran drives a private hire car around Bradford and out to Leeds Bradford Airport. His profit is £28,000 a year.
His yearly bill is about £4,010. Spread monthly, that’s roughly £334.
His takings come in every week, all year. Monthly payments would suit him well. What he should do now: set up a standing order of £334 into a tax pot and see how it feels.
A Harrogate B&B Owner Who Earns Most in Summer
Claire runs a four-room B&B near the Stray. Her profit is £36,000 a year. The Great Yorkshire Show in July and the summer walkers fill her rooms. Winter is slow.
Her yearly bill is about £6,090. Monthly, that’s around £508. Quarterly, it’s about £1,523.
In February she might take very little, but £508 would still be due. What she should do now: save extra from June to September to cover the quiet months.
A Wakefield Builder Paid Under CIS
Dean is a self-employed joiner working on new housing sites around Wakefield. His profit is £40,000 after costs. Contractors take 20% from his labour under the Construction Industry Scheme.
His yearly bill is about £7,130. But his contractors have already taken around £10,000 from his pay. That’s more than his whole bill.
Today, when most of your tax is already taken at source, you usually don’t make payments on account. HMRC hasn’t said exactly how CIS will fit the new plan. What he should do now: keep every CIS statement, and check each year whether he’s due a refund.
A York Tour Guide With a Quiet Winter
Sophie leads walking tours past the Minster and through the Shambles. Her profit is £22,000 a year. Most of it comes between April and October.
Her yearly bill is about £2,450. Monthly, that’s roughly £204.
For Sophie, quarterly payments might suit better than monthly. What she should do now: note down which months she earns most. She may want to tell HMRC her preference if the choice comes in.
A Huddersfield Landlord Who Also Has a Day Job
Mark earns £38,000 a year as an engineer. He also lets out a terraced house in Lindley, which makes £9,000 profit after costs. We’ve left out the mortgage interest credit to keep it simple.
Rental profit doesn’t attract National Insurance. His extra tax is about £1,800 a year.
Mark sits in the group that’s already confirmed. From April 2029, around £150 a month could come out of his salary. What he should do now: check his tax code every time HMRC sends a new one.
Your Month-by-Month Tax Savings Plan
You don’t have to wait for HMRC. You can start living on a monthly tax rhythm today. Here’s how.
Step 1: Work Out Your Monthly Tax Figure
Take your last tax bill. Divide it by 12. Then add 10% to cover growth or a price rise.
If your last bill was £4,000, that’s £333 a month. With the extra 10%, aim for about £367.
Step 2: Open a Separate Tax Pot
Keep your tax money away from your business account. A separate savings account works well, ideally one that pays interest.
If you can’t see the money, you’re far less likely to spend it on a new van tyre or a quiet month.
Step 3: Save Harder in Your Busy Months
A flat amount every month suits steady earners like Imran. Seasonal workers need a different plan.
Claire in Harrogate could save 20% of every booking in summer. Then she’d draw from the pot in winter to cover her monthly payment.
Step 4: Test the System Before HMRC Makes You
Run your plan for six months. Did you hit your target? Did a quiet month knock you off track?
It’s far better to find the gaps now than in April 2029.
Building a Cash Buffer for 2029 to 2030
The overlap year is the biggest risk. So build a buffer for it now.
Use our rule from earlier. Your buffer should be about half your usual yearly tax bill.
There are around 30 months between now and April 2029. Divide your buffer target by 30. That’s how much to put aside each month.
For Imran in Bradford, half his bill is about £2,005. Over 30 months, that’s roughly £67 a month. It’s a small habit that saves a big headache later.
Keep the buffer separate from your normal tax pot. Treat it as money that’s already spent.
Tools HMRC Already Gives You
You don’t have to wait for 2029 to pay little and often. HMRC already offers some useful options.
Budget Payment Plans
A Budget Payment Plan lets you pay towards your next Self Assessment bill weekly or monthly. You set it up in your HMRC online account. You can pause it or change the amount.
To use one, your previous payments need to be up to date. It’s the best way to practise monthly tax before it becomes the rule.
Asking HMRC to Lower Your Payments on Account
If your profits have dropped, your payments on account may be too high. You can ask HMRC to reduce them online or with form SA303.
Be careful. If you cut them too far, HMRC charges interest on the shortfall. A good self assessment tax return accountant can work out a safe figure for you.
Time to Pay When You Can’t Pay in Full
Sometimes the money isn’t there. If that happens, don’t ignore it. HMRC may let you spread the bill over time.
You can often set up a plan online if you owe £30,000 or less. Interest still applies, but you avoid bigger penalties. Talk to HMRC early, before the debt grows.
Keeping Records That Make Your Forecast Accurate
Under the new system, your monthly payments are only as good as your figures. Messy records mean wrong forecasts. Wrong forecasts mean paying too much or too little.
Making Tax Digital will help here. It already applies to sole traders and landlords with income over £50,000. The limit drops to £30,000 in April 2027 and £20,000 in April 2028.
Under MTD, you send HMRC quarterly updates from approved software. HMRC has asked whether these updates should shape your monthly payments too. So the tidier your records, the fairer your payments are likely to be.
Here are three habits worth starting now:
Upload receipts every week, not every January
Match your bank feed to your software each month
Check your profit every quarter, so you spot changes early
Should You Change How Your Business Is Set Up?
Some people will ask whether they should become a limited company instead. That’s a fair question.
The professional body ICAS raised it in its consultation response. Its worry was that sole traders might rush to incorporate, since company tax timing isn’t changing.
But a limited company brings its own costs and rules. You’d run payroll, file company accounts and pay yourself through salary and dividends. For many people, it isn’t worth the switch.
Don’t change your setup just to dodge monthly payments. Change it only if the numbers work for your business as a whole.
Six Mistakes to Avoid Before Monthly Payments Start
Spending your January “float”. Many people treat the gap before January as spare cash. That gap is going away.
Forgetting the overlap year. It’s the most expensive year of the change. Plan for it now.
Ignoring new tax codes. If you have a job too, check every code HMRC sends. Mistakes happen.
Never updating your forecast. If your income drops, tell HMRC. Otherwise you’ll overpay for months.
Mixing tax money with business money. It’s the quickest way to come up short.
Leaving advice until 2029. By then, your options will be fewer and your buffer will be smaller.
Your Preparation Timeline: Now to April 2029
When | What happens | What you should do |
|---|---|---|
Autumn 2026 | Government responds to the consultation | Read the final plans and check your group |
Late 2026 | Planning starts | Open a tax pot and start your overlap buffer |
6 April 2027 | MTD starts for income over £30,000 | Get your software set up if you qualify |
6 April 2028 | MTD starts for income over £20,000 | Check your records match your bank each month |
During 2028 | New law expected in a Finance Bill | Try a Budget Payment Plan for a few months |
31 January 2029 | Your last normal January bill | Make sure your buffer is in place |
6 April 2029 | In-year payments start | Check your first payment against your forecast |
31 July 2029 | Final old-style payment on account | Use your buffer for this one |
Frequently Asked Question
Will the monthly tax bills self employed consultation affect me?
Probably, if you make payments on account today. If you also have a job or pension, the change is already confirmed for April 2029. If you only work for yourself, HMRC is still deciding.
Can I start paying my tax monthly now?
Yes. A Budget Payment Plan lets you pay weekly or monthly towards your next bill. You set it up in your HMRC online account.
Will my CIS deductions count towards my monthly bill?
Today, CIS deductions already count as tax paid. Many subcontractors get refunds. HMRC hasn’t yet said exactly how CIS will work under the new plan.
What if a client pays me late?
That’s one of the biggest worries in the consultation. You’ll be able to update your forecast if your income drops. Keep a buffer for slow payers too.
Will monthly payments affect my mortgage application?
Lenders usually look at your tax calculations and tax year overviews from HMRC. These come from your yearly return. Paying monthly doesn’t change what you earn.
Will I still get a refund if I overpay?
Yes. You’ll still file a yearly return. If you’ve paid too much, HMRC refunds you or sets it against your next bill.
Do I need an accountant for monthly tax payments?
Not always. If your income is steady and simple, you may manage alone. If your income changes month to month, or you mix a job with your own business, advice can save you money and stress.
Does this apply to landlords?
Landlords with a job or pension will likely fall into the PAYE route. Full-time landlords on payments on account would be included if the direct route goes ahead.
Talk to a Tax Advisor Before the Changes Arrive
The monthly tax bills self employed consultation is closed, but you’ve still got time to prepare. But the people who start early will find 2029 much easier.
At SAS Yorkshire, we work with sole traders, landlords and contractors from our office on Track Road in Batley, and across Leeds, Bradford, Wakefield and Huddersfield. We can work out your monthly figure, plan your overlap buffer and check your forecast every year.
Looking for a straight-talking tax advisor leeds clients trust? Contact us to book your free first chat.
