HMRC Wants Sole Traders and Landlords to Pay Tax Sooner: What the Payment on Account Shake-Up Could Mean for Kent

Early August is usually a quiet moment in the tax calendar for Kent business owners. The second payment on account fell due on 31 July, the summer is in full swing, and Self Assessment feels a long way off. But behind the scenes there is a change worth knowing about: HMRC is consulting on reforming payments on account, and it could eventually change when sole traders and landlords across Gravesend, Dartford and Medway hand their tax over. The consultation closes on 4 August 2026, so this is a good moment to understand what is on the table.

How payment on account works today

If you complete a Self Assessment tax return and your bill comes to more than £1,000, HMRC usually asks you to make two payments on account towards the following year’s tax. Each one is half of your previous year’s bill. The first is due by 31 January, alongside any balancing payment for the year just gone; the second by 31 July. When your next return is filed, everything is squared up — you either owe a little more or receive a refund. It is a system built around paying after the tax year has ended, based on what you owed last time.

What HMRC is now proposing

The consultation floats a more fundamental shift: paying your tax during the tax year it actually relates to, rather than in instalments based on the previous year. Under the idea being explored, you would pay your forecast liability across the year as you earn, with a single balancing payment or repayment the following 31 January once your real position is known. In other words, tax would move closer to “pay as you go” — much as it already works for employees under PAYE.

Who would be affected

This is aimed squarely at Self Assessment taxpayers, which in our area means a great many sole traders, freelancers and, in particular, landlords with rental income. If you are used to the familiar January-and-July rhythm, this would be a meaningful change to how and when you budget for tax. Company directors paid through PAYE are less exposed, though many also file Self Assessment for their dividends and would still feel it.

The cash-flow catch

For some, paying in-year would actually help. Setting money aside little and often is easier than finding a large lump sum twice a year, and it takes the sting out of a big January bill. But there is a catch worth naming plainly: moving to in-year payments can pull forward when tax is paid. During any transition, some taxpayers could find themselves paying towards the current year while still settling the old system — a temporary squeeze on cash flow. The detail of how a change like this is phased in matters enormously, and that is exactly the sort of thing a consultation is meant to work out.

A proposal, not a law — no need to panic

It is important to keep this in proportion. This is a consultation, not a confirmed change, and it closes on 4 August 2026. Any reform would then need to be designed, announced and phased in — and with a new Chancellor and an Autumn Budget ahead, the timing is genuinely uncertain. Nobody should be restructuring their finances today on the strength of a proposal. The value right now is simply in seeing it coming rather than being caught out later.

What Kent business owners can do now

There are sensible steps that make sense whatever HMRC decides:

• Keep a tax reserve. Moving a set percentage of every payment you receive into a separate account is good discipline today and would leave you ready if in-year payments ever arrive.
• Get your records current. If you are already keeping digital records for Making Tax Digital, you are well placed — real-time figures make in-year estimates far easier.
• Know your numbers. The better your forecast of this year’s profit, the less any change to timing can catch you out.
• Talk to us before you assume the worst. Much of the worry around tax changes comes from not knowing how they apply to your own figures.

How MCC Partners can help

We keep an eye on changes like this so you do not have to. For sole traders, landlords and company owners across Gravesend and the wider Kent area, that means explaining what a proposal like this would mean for your specific position, helping you build a tax reserve that smooths out the peaks, and making sure your record-keeping is ready for whatever HMRC settles on. If the payment on account rules do change, we will model the impact on your own numbers and give you plenty of notice.