Not quite – and there is an important distinction to make.

The Government has announced that, from April 2029, Self Assessment taxpayers who also have sufficient PAYE income will be required to make payments towards their forecast Self Assessment liability through PAYE.

In simple terms, if you have a job or pension taxed through PAYE but also have income that needs to be declared through Self Assessment, perhaps from self-employment or property, HMRC could collect the additional tax through your PAYE tax code throughout the year.

For taxpayers whose income comes solely through self-assessment, such as many sole traders and landlords, the position isn’t yet confirmed.

The government has been consulting on whether the current Payments on Account system could be changed so that tax is paid more regularly throughout the year.

Options being explored include monthly or quarterly payments.

So, while monthly tax payments for all sole traders from 2029 have NOT been confirmed, the direction of travel is certainly worth paying attention to.

Currently, many sole traders and landlords pay their tax through Payments on Account.

Generally, this means making payments on:

31 January
and
31 July

There may also be a balancing payment due in January once the final tax liability for the previous tax year is known.

It isn’t always the easiest system for taxpayers to understand, and the January tax bill in particular can come as a nasty surprise if money hasn’t been put aside throughout the year.

The government believes that collecting tax more regularly could help taxpayers budget and reduce the number of people who fall behind with their tax payments.

In theory, that sounds sensible.

In practice, however, there are some potential problems.

This is probably my biggest concern.

Not every business earns the same amount every month.

Imagine a seasonal business that earns most of its profit during the summer. A tradesperson might have an exceptionally busy few months followed by a quieter period. Another business might have £20,000 sitting in outstanding customer invoices but very little cash actually in the bank.

Profit and cash are two very different things.

If tax starts being collected monthly based on estimated profits, businesses will need to manage their cash flow extremely carefully.

It could be particularly challenging during the transition.

Under the proposals being considered, taxpayers could potentially be paying outstanding tax relating to the previous system while also beginning to make payments towards their current year’s tax liability.

The government has recognised this potential issue and has been considering transitional measures to help taxpayers manage the change.

This is where things become particularly interesting.

There are millions of people who have PAYE income but also complete a Self Assessment tax return.

That might include someone who:

• has a full-time job and a side business;
• is employed but also owns a rental property;
• receives a pension alongside other taxable income; or
• has other income that needs to be reported through self-assessment.

From April 2029, where there is sufficient PAYE income, the plan is for payments towards the forecast Self Assessment liability to be collected through PAYE each payday.

That means changes to the individual’s PAYE tax code could result in more tax being deducted from their wages or pension throughout the year.

For somebody who is both employed and self-employed, this could make understanding their payslip and tax code even more important.

If their self-employed profits increase or decrease significantly, their forecast tax liability may also need to change.

We could therefore see tax codes being adjusted as people’s circumstances change.

In my opinion, absolutely.

MTD for Income Tax is moving sole traders and landlords towards keeping digital accounting records and providing HMRC with information more regularly.

I’ve always believed that more regular tax collection was the inevitable direction of travel.

Digital records.

More regular reporting.

More up-to-date information.

And eventually, tax payments moving closer to when the income is actually earned.

It doesn’t necessarily mean that MTD automatically results in monthly tax payments, but the two systems certainly complement each other.

For me, this highlights why MTD shouldn’t simply be viewed as another HMRC compliance exercise.

Businesses need to start thinking differently about their numbers.

Historically, some sole traders could get away with handing their accountant a year’s worth of records after the end of the tax year.

Those days are disappearing.

With MTD and the possibility of more regular tax payments, business owners will increasingly need to know:

• How much profit am I making?
• How much tax should I be putting aside?
• What does my cash flow look like over the next three, six or twelve months?
• Can I afford to take this money out of the business?

This is why I believe regular bookkeeping, tax planning and financial reviews are becoming more valuable for small businesses.

Accounting shouldn’t simply be about calculating what happened last year.

It should help you understand what’s happening in your business right now and what’s likely to happen next.

Potentially.

For some taxpayers, paying smaller amounts regularly could be much easier than finding several thousand pounds for a January tax bill.

It could encourage better budgeting and remove some of the stress surrounding the Self Assessment deadline.

But it needs to be implemented carefully.

There must be sufficient flexibility for businesses with seasonal or unpredictable income, and HMRC needs to make it straightforward for taxpayers to update estimates when their circumstances change.

The transition will also need careful thought. Nobody wants small businesses facing serious cash flow pressure simply because they are moving from one tax payment system to another.

The Government’s consultation on Timely Payments in Income Tax Self Assessment closed on 4 August 2026, and a response is expected in autumn 2026.

The PAYE changes are intended to take effect from April 2029, with any relevant legislation expected to be introduced through a future Finance Bill.

For other self-assessment taxpayers, including those without sufficient PAYE income, we will have to wait and see what the government decides following the consultation.

But I would certainly encourage sole traders and landlords to keep an eye on this.

The combination of Making Tax Digital and potentially more frequent tax payments means good bookkeeping and cash flow management are going to become increasingly important over the next few years.

Would you prefer to pay your tax monthly or quarterly rather than facing larger payments in January and July?

Or do you think collecting tax more frequently will simply create additional cash flow pressure for small businesses?

I’d be interested to hear your thoughts.

At Swan Saunders, we work with sole traders, landlords and small businesses to help them understand their numbers, stay on top of their bookkeeping and plan ahead for their tax liabilities.

If you’re unsure how MTD will affect you, or you’d like to improve your bookkeeping and cash flow planning before the changes arrive, please get in touch.

For reference, the underlying HMRC consultation and factsheet are available on GOV.UK – Timely Payments in Income Tax Self Assessment and HMRC’s Timely Payments factsheet.