HMRC's tax changes: what self-employed workers need to know

[JonMoxley19]

Self-employed workers face changes to how they pay tax. Which? explains that from April 2029, the two lump sum payments on account due on 31 January and 31 July will be replaced by smaller, more frequent payments during the year

The details are not yet confirmed. The change could affect up to 3.6 million people, about 30 percent of the 12 million who file self assessment returns, since payments on account apply to tax bills over £1,000

The threshold for Making Tax Digital, which requires digital records and quarterly updates, falls from £50,000 to £30,000 in April 2027. Many more sole traders will need suitable software

The Office for Budget Responsibility says the change will take £17 billion out of self-employed people's cash reserves in 2029 to 2030. IPSE says one in three self-employed workers has less than three months of expenses saved, while the Treasury says it means paying earlier, not paying more

More frequent payments could make tax easier to budget for, but the transition year may squeeze people's savings. Getting ready for Making Tax Digital early is wise for anyone near the new threshold. Good accounting software will become even more important

Would smaller, more frequent tax payments suit you? And are you ready for Making Tax Digital?

HMRC's tax shake-up: what self-employed workers need to know - Which?www.which.co.uk