Budget 2026: Self Assessment tax payments moving closer to real time

One of the less headline-grabbing Budget announcements could have a significant cashflow impact for the self-employed, business partners and others paying tax through Self Assessment.

From April 2029, the Government plans to replace the familiar twice-yearly payments on account with smaller, more regular payments during the tax year. The precise frequency has not yet been confirmed, although quarterly payments have been discussed.

At present, most taxpayers within payments on account pay in January and July, with any balancing payment due the following January. The new system will bring the payment of tax much closer to the period in which the income is earned.

The Government’s view is that this should make tax bills easier to budget for. However, there is an obvious cashflow consequence. The amount of tax may not change, but taxpayers will have to hand over the money sooner.

This could be particularly significant for sole traders, partners and LLP members with substantial or fluctuating profits, who will need to factor more frequent tax payments into their business and personal cashflow planning.

There may also be a cashflow pinch point when the new system is introduced in 2029/30, as the existing payment cycle overlaps with the move towards in-year payments.

There is still considerable detail to come before April 2029. At Dafferns, we will be watching developments closely and helping clients plan for the changes as the new payment arrangements become clearer.