HM Revenue & Customs (HMRC) has proposed changes that could require millions of self-employed taxpayers to make tax payments covering two years within a 14-month period, according to experts. The plan, set to begin in April 2029, aims to collect income tax on a monthly basis, similar to the Pay As You Earn (PAYE) system used for employees, replacing the current twice-yearly payment schedule.

Under the existing framework, self-employed individuals and others who file self-assessment tax returns typically make payments on account twice a year—on January 31 and July 31—each based on 50% of the previous year’s tax liability. A balancing payment is then made the following January 31. HMRC’s proposal would introduce monthly tax payments on income as it is earned during the tax year, facilitated by adjustments to PAYE coding notices.

However, the transition period is expected to create an overlap in payments for the 2028-29 tax year. On January 31, 2029, self-employed taxpayers will make their first payment on account for that year, with a second due on July 31. Starting in April 2029, the new monthly payments would begin, leading to a period in which taxpayers might effectively pay twice for the same income, raising concerns about cash flow pressures.

Tax experts have expressed reservations about the plan. Dan Neidle, founder of Tax Policy Associates, described the proposed changes as a potential mistake and urged the government to reconsider. Charlene Young of stockbroker AJ Bell noted that although the reforms are intended to prevent “bill shock” from large tax bills twice a year, they could result in increased administrative burdens and more customer inquiries to the already strained HMRC helpline.

There is also concern about the accuracy of advance payments, as relying on forecasts could lead to taxpayers overpaying. Estimates from HMRC indicate that about 3.6 million taxpayers—roughly 30% of the 12 million individuals filing self-assessment returns—make payments on account and would be affected by the change.

HMRC emphasized that no one will end up paying more tax overall and argued that spreading payments evenly across the year would help taxpayers avoid large lump-sum bills. The department recently concluded a consultation seeking feedback on how to manage the transition smoothly and stated that further details would be provided in due course.