News & Insights · 14 November 2026
Could You Pay Two Tax Bills in One Year? The 2029 Self Assessment Change
The Budget confirmed a big change to how the self-employed pay tax from April 2029. It sounds simple, but the changeover year could be a real squeeze on cash flow. Here is what we know, in plain English.
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If you are self-employed or a landlord and you pay your tax in two big chunks each year, that is about to change. From April 2029, payments on account are due to move to smaller, more regular payments through the tax year. The aim is to make budgeting easier and cut down on nasty surprises. The worry is what happens in the year of the switch.
The key facts at a glance
How it works today
Most self-employed people and landlords whose tax bill is over a certain size pay in advance, in two instalments called payments on account. They are due on 31 January and 31 July, and they are each based on half of your previous year's bill. Any difference is settled in your next return. Our guide to the self assessment process covers the basics.
What is changing from April 2029
- ✓Around three million people who make payments on account will move to smaller, more regular payments during the tax year.
- ✓The government has not yet decided whether those payments will be monthly or quarterly.
- ✓Your payments will still be worked out from your previous year's tax bill.
- ✓If your circumstances change, you will be able to update your payments online.
- ✓The government presents the change as a way to make budgeting easier and reduce unexpected bills.
The catch: the changeover year
HMRC has said that in 2029-30 affected taxpayers will have to make their final payment for the previous tax year while also starting payments under the new arrangements. In other words, for one year you could be paying off the old bill and the new instalments at the same time.
See it with real numbers
It is easier to understand with figures. Scroll down for a worked example of a self-employed electrician, including what the changeover year could look like month by month.
This overlap is also why the Treasury gains. The Office for Budget Responsibility (OBR) puts the extra cash received in that year at about £17 billion. That is a change in when tax is paid, not an increase in the rate, but for the person paying it, the cash still has to come from somewhere.
HMRC has promised support for the changeover, including payment plans, with more detail due in 2027.
Worked Example
Meet Sam, a self-employed electrician
Let us follow Sam through the change. To keep it simple, we will use round numbers and a steady income.
What we are assuming
- •Sam's tax bill (income tax plus Class 4 National Insurance) is £6,000 a year, every year.
- •In the changeover year, 2029-30, Sam still owes a final payment of £3,000 for the old year.
- •The new payments are worked out from last year's bill, so they add up to £6,000 across the year.
These are made-up figures to show the idea. The real amounts and dates depend on rules the government has not yet published.
Step 1: a normal year today
Sam pays two payments on account of about £3,000, in January and July. That is £6,000 over the year, in two lumps.
Step 2: the changeover year, 2029-30
Now Sam pays the new smaller payments and clears the last £3,000 of the old year. Here is how that could look if the payments turn out to be monthly or quarterly.
| A normal year today | 2029-30 if monthly | 2029-30 if quarterly | |
|---|---|---|---|
| Regular payments | 2 x £3,000 | 12 x £500 | 4 x £1,500 |
| Final payment for the old year | None | £3,000 once | £3,000 once |
| Total paid that year | £6,000 | £9,000 | £9,000 |
| Busiest single payment day | £3,000 | £3,500* | £4,500* |
*If the final £3,000 for the old year happens to land on the same day as one of the new payments.
The takeaway
Sam's tax bill has not gone up. But in the changeover year, £3,000 extra leaves the bank, 50% more cash than a normal year. After that, Sam is back to £6,000 a year, just paid in smaller pieces. That timing effect, repeated across millions of people, is where the Treasury's one-off cash boost comes from.
Step 3: what if Sam's work dips?
Say Sam has a quiet year and the tax for the new year is only £4,000. The new payments are still based on last year's £6,000 bill, so Sam would be paying £500 a month when £333 would be enough. That is about £2,000 of Sam's own money sitting with HMRC. Sam can update the figures online to bring the payments down, but only if Sam spots it and does it in time. This is why up-to-date numbers matter.
Step 4: how Sam gets ready
The extra £3,000 is the pinch point. If Sam starts early, it does not have to hurt:
£125
set aside each month for 24 months
→
in a separate savings pot
£3,000
ready by April 2029
Your own numbers will differ. Work out yours by taking half of your latest tax bill as a rough guide to the extra, and dividing it by the months you have left.
Who is most likely to feel it?
Easier for some
If your income is steady, smaller regular payments can be simpler to plan than two big bills a year. There are fewer lumps to save up for.
Harder for others
If your earnings go up and down, such as builders, freelancers, seasonal businesses and landlords with big repair bills, a payment due every month or quarter can land at a bad moment.
Because payments are based on last year, anyone whose income has dropped could find they are paying more than their current earnings suggest, until they update their figures.
What you can do now
April 2029 is a way off, and the detail is still to come. But you do not need to wait to get ready.
Start setting tax aside each month
Put a share of every payment into a separate savings pot. It builds the habit, and a cushion for the changeover year.
Keep your records digital and up to date
Making Tax Digital for Income Tax is already phasing in. Real-time numbers make it much easier to see what you owe and to update payments if your income changes. See our MTD for Income Tax page.
Know your figures early
A monthly view of profit and tax in Xero means no shocks. It is exactly how we work with our clients.
Plan the cash flow
A simple forecast shows the months when money is tight, so you can plan for the overlap rather than react to it.
Watch for the detail in 2027
Monthly or quarterly, payment plans and how updates work will be set out then. We will keep you posted.
What do you think?
Could your business comfortably handle the changeover, or would it create a cash flow headache? We would love to hear. Call us or send us a message on WhatsApp or Messenger.
This article is general information, correct at 14 November 2026. The detail of the new system has not yet been published and may change. For the current rules, see GOV.UK: understand your Self Assessment bill, or talk to us about your own situation.
Want to be ready before 2029?
Call us on 01778 252712 or PM us and we will talk you through what it means for you. No jargon, promise.
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