Taxed on money I haven't earned yet? Bold move, HMRC

That's the gist of a consultation HMRC is running right now, called Timely Payments in Income Tax Self Assessment. From April 2029, anyone who files self assessment but also has enough PAYE income will have their forecast tax collected through their payslip. The rest is still up for grabs. HMRC is exploring whether the self-employed and landlords should pay monthly or quarterly instead of the familiar January and July double whammy, with monthly bills possibly landing from 2030. Each payment would be based on your last tax return, chopped into twelve.

The pitch isn't unreasonable on the surface. HMRC says spreading payments through the year would help people avoid nasty lump sum bills and stop them sliding into tax debt. Australia, Canada, France, Germany and the US all do something similar, but the majority more on a quarterly basis. Nobody would pay more tax overall, we're told. Only the timing would change.

But surely timing is the whole game when you're self-employed. When I asked freelancers and contractors this week whether they could afford a tax bill every single month, around three quarters said no, either because their income is too unpredictable or because late payers would sink them. One freelancer summed up the maths: she can have an £8,000 month followed by a £1,200 month depending on when clients pay. Technically she could handle monthly bills. She'd just rather not spend her life doing it. Or as business founder and sales consultant, Jordan Japal put it: "The unpredictability is what makes it difficult as a solopreneur. Quieter months and basing it on estimates just seems quite scary."

Billed on a guess

Because here's the mechanical problem. Your tax bill has always been calculated on profit, income minus expenses, and nothing in this proposal changes that. What changes is that HMRC would bill you from a forecast built on last year's return. Last year's income, last year's expenses. Which means a quiet month, a big expense or a late payer this year is invisible to the bill. It just keeps landing.

Digital PR consultant Chris Nunn tracks his income, tax and pension monthly and still thinks the sums fall apart: "Between clients paying late, some have had me wait nearly an entire month after the invoice was due, and retainers changing from time to time, making payments monthly could be hellish. I'd have to dip into savings to make up shortfalls." He points out that illness, bereavement or childcare can knock a hole in any month's income, "never mind a monthly tax coming due. Even taking a holiday could screw some people over in the monthly model."

He also spots a gap in the proposal itself. At least the current payments on account build credit towards the January bill. "The current proposal doesn't seem to offer that, meaning you'd be paying for a high income year all year, until the next set of accounts, and even then there's no real explanation of how credit would work. It just seems a bit baffling." His bottom line: "The goal of smaller payments more often is fine, but this shouldn't be something forced on people. Some of us in volatile industries need the full year to iron out the wrinkles left by late payments, client fluctuations and events in our personal lives."

What are we supposed to do, not eat?

HMRC's answer to all this is that you can flag if your income will be significantly higher or lower than expected, and refunds would be processed when necessary. I'll let anyone who has ever chased HMRC for a refund enjoy that sentence for a moment. Freelance PR consultant Claire Moran doesn't mince it: "Freelancers know when their tax payments are due, in July and January, and budget for this. Paying monthly for many is just not feasible. What are we supposed to do when, as happens sometimes, we have little or no income in a month? Go without eating and not pay utility bills in order to pay a tax bill which may be more than necessary because it's based on past earnings?" If monthly payments are forced through, she predicts, "many will default."

The view from Slovenia

In fairness, not everyone hates the idea. A few people told me they'd genuinely prefer smaller regular payments to the January horror show, though one added a condition HMRC should note: she'd want payments based on her actual monthly figures, not assumptions from last year.

And one freelancer I spoke to already lives under a system remarkably close to what HMRC is proposing. Masa Butara, a freelancer based in Slovenia, pays what they officially call an "advance payment": a fixed monthly amount, due by the 20th, calculated from her previous year's income. Lower earners pay quarterly instead, a tiering HMRC might want to note. One caveat she offers: Slovenian sole traders' biggest monthly outgoing is fixed social contributions rather than tax itself, so the monthly tax bills stay small. A UK contractor's twelfth could be a rather heftier number.

Still, she likes it. "For me this system works fine and I would prefer it over a once a year payment. I don't have a huge load to pay at once. If I overpay I get something back, if I don't pay enough, a chunk is still waiting for me."

But she's clear-eyed about where it bites. Slovenians file their tax report once a year, so the system doesn't know what you've actually earned until the following spring. "If your client was due in December and still hasn't paid until April or May, you still need to pay, even though you haven't received the money yet." It hasn't happened to her, but it has to people she knows: "One company was six months late on a huge invoice, which meant paying a lot of taxes before getting the money. If you work on huge projects and get paid in big chunks, and those are late, you're screwed."

Slovenia does have a safety valve, though, and this is the bit HMRC should be taking notes on. If your income drops mid-year, you can apply to lower your advance payment, with evidence, at least 30 days before the next one is due. "This would be my advice," Masa says. "Have this option as a safety net if you earned a lot and the current year is not so good."

Finish the homework first

And HMRC isn't inventing a problem. In January 2025, 1.1 million payments on account were missed, and three quarters became debt HMRC had to chase. Lump sum bills genuinely catch people out, especially newer freelancers. A monthly nudge would have been useful in my first year. But there's a difference between helping people smooth their tax and defaulting everyone onto a payment schedule designed for salaries. If HMRC wants us paying more evenly, make voluntary budget payment plans dead easy and actually visible. Don't bolt a PAYE-shaped system onto incomes that have never once behaved like a payslip.

Which brings me to the credibility problem. HMRC is consulting on this while its current flagship reform is wheezing on the runway. Making Tax Digital's first quarterly deadline lands on 7 August, and of the 864,000 people who should have registered, fewer than half have. Claire Moran again: "Thousands will miss the deadline for MTD, a change that is going to cost us dear in both time and money and which has been imposed on us without our consent." The department that can't yet get half its mandated users signed up for quarterly reporting is sketching out monthly billing. Maybe finish the current homework first.

The consultation closes on 4 August. Not next year, three weeks from now. If you're self-employed, this is the moment to tell HMRC, in detail, exactly how your income actually arrives. Respond at gov.uk through the online form or email timelypayment@hmrc.gov.uk.

Because I'm happy to pay tax on every pound I earn. I'd just like to earn it first.