Millions of taxpayers are being caught out by large HMRC bills — accountants reveal four legitimate ways to spread the cost

• Many first-time self-employed workers are unaware of “payments on account”
• Taxpayers can face unexpectedly large January and July HMRC demands
• 298,905 people filed their Self Assessment tax return in the first week of the tax year
• A record 737,891 completed theirs in April 2026, with 86,270 filing on Easter Monday alone
• Accountants say confusion still exists around how and when tax is actually paid

Every year, millions of self-employed workers, landlords and side-hustle earners are being caught out by larger-than-expected HMRC bills and complex payment timings, despite record numbers of taxpayers filing early in the new tax year.

New figures show 298,905 people submitted their Self Assessment tax return in the first week of the tax year, while a record 737,891 completed theirs in April 2026. On Easter Monday alone (6 April), 86,270 taxpayers filed their 2025/26 return.

HMRC data also shows strong levels of early filing activity, reflecting a growing number of taxpayers submitting returns well ahead of the January deadline.

However, Oxfordshire-based Chartered Accountancy firm Ridgefield Consulting warn that despite rising early filing rates, many taxpayers still do not fully understand how the Self Assessment system works, particularly the timing and structure of HMRC payments.

Simon Thomas, Managing Director of Ridgefield Consulting, said:

“We see many business owners and self-employed workers experiencing the stress of an unexpected HMRC bill arriving, particularly where payments on account increase what they are expecting to pay.

“The key issue is often cash flow rather than compliance; people aren’t necessarily doing anything wrong, they just haven’t planned for how the system works. The good news is there are practical, legitimate ways to make tax payments more manageable and reduce that pressure if you take action early.”

The issue is becoming increasingly common as more people generate income outside traditional employment through freelance work, online businesses, property income and second jobs.

One of the biggest shocks comes from HMRC’s “payments on account” system, where taxpayers are often required to make advance payments towards the following year’s tax bill alongside their current liability.

For many newly self-employed workers, this can create what feels like a double payment demand in January.

The firm has highlighted four legitimate ways taxpayers may be able to reduce the pressure of large HMRC bills.

1. Make regular budget plan payments throughout the year

One of the most effective ways to manage tax liabilities is to make voluntary payments towards a future bill using HMRC’s Budget Payment Plan system. This allows taxpayers to set up weekly or monthly payments, depending on their circumstances.

This approach is particularly useful for self-employed workers and landlords with fluctuating income, helping to smooth payments across the year and avoid large lump sums at deadline points.

2. File tax returns earlier

Many taxpayers believe filing a Self Assessment tax return early means paying tax sooner, but this is not the case.

In practice, submitting a return well ahead of the January deadline simply gives individuals more time to understand their tax position and plan for what they owe, rather than being faced with a large bill at the end of the year.

Filing earlier also provides greater visibility over whether payments on account will apply, which can significantly impact the total amount due. In addition, where a taxpayer is owed a refund, submitting the return earlier can result in HMRC processing repayments sooner, improving short-term cash flow for individuals and small businesses.

3. Check whether tax can be collected through PAYE

Another way to spread the cost of a tax bill is to have HMRC collect it through your PAYE tax code, where eligible. Instead of paying a lump sum directly to HMRC, any outstanding Self Assessment liability can be adjusted through your tax code and recovered gradually from salary or pension income over the following tax year.

This effectively allows the tax to be broken down into monthly deductions, making it more manageable than a single payment at set deadlines. For many taxpayers, it can provide a more automated way of handling liabilities where income is already taxed at source.

4. Consider a Time to Pay arrangement

If a taxpayer is unable to pay their bill in full and on time, they may be able to set up a Time to Pay (TTP) arrangement with HMRC.

Where a payment has been missed or is likely to be missed, contacting HMRC early can improve the chances of an agreement being approved, as Time to Pay allows tax to be repaid in agreed instalments over a set period rather than as a single lump sum. These arrangements are typically set up online and can help prevent penalties or enforcement action where taxpayers are experiencing financial difficulty.

Taxpayers owing under £30,000 may be eligible for an online payment plan, provided their Self Assessment return is up to date, and there are no other outstanding issues.

Simon Thomas added:

“The worst thing taxpayers can do is ignore the issue and wait for payment deadlines to pass.

“In many cases, there are options available to spread payments more gradually or avoid the situation from becoming more financially damaging.

“Even simple steps like filing earlier or making smaller monthly contributions throughout the year can make a significant difference to cash flow and reduce stress.”

Looking ahead, Making Tax Digital (MTD) rules are expected to push more taxpayers towards ongoing digital reporting, making tax liabilities feel more “real-time” and increasing the importance of budgeting throughout the year rather than relying on a single annual bill.

Find out more about HMRC Payments on Account.