Most landlords have made their peace with the tax calendar. You file your return, you pay in January, you pay again in July, and in between you get on with running your properties. It isn’t fun, but it’s predictable.

That predictability might be about to change.

The Treasury has opened a consultation on a fairly big shift in how people who don’t earn through PAYE — landlords and the self-employed, in other words — actually hand over their income tax. Instead of two payments a year, HMRC is looking at collecting tax in smaller, more frequent chunks. Possibly monthly.

What’s actually being proposed

Here’s the part that’s raised eyebrows. Under the plans being considered, your monthly payments wouldn’t be based on what you’re earning right now. They’d be based on your last tax return.

HMRC would take the tax bill from your most recent return, treat that as a forecast for the year ahead, and split it into instalments. So a landlord who declared £30,000 of income last year could find themselves paying around £290 a month, whether or not this year looks anything like last year.

In effect, you’d be paying tax in advance — on money you may not have received yet.

If that sounds a bit like the “payments on account” system that already exists, you’re not wrong. The difference is frequency and framing. Right now those advance payments land twice a year and most people plan around them. Spread the same idea across twelve monthly deductions, based on an estimate, and it starts to feel a lot more like PAYE — the very system landlords opted out of when they stopped being someone’s employee.

Zena Hanks, a partner at accountancy firm Saffery, put the concern plainly: “For the self-employed, this is going to cause huge disruption.” Her point was a simple one — you can’t easily predict future income, so basing today’s payments on last year’s figures is always going to be a rough guess.

Why this matters more for landlords than most

Property income is lumpy. Anyone who lets homes for a living knows that a good year and a bad year can look wildly different, and often for reasons entirely outside your control.

A tenant gives notice and the property sits empty for six weeks. The boiler packs in during a cold snap and swallows £2,500. A landlord remortgages onto a higher rate and watches the margin shrink. Rent arrives late, or doesn’t arrive at all for a couple of months while you sort things out. None of that shows up in last year’s return — but under these proposals, last year’s return is exactly what your monthly bill would be built on.

Pay a fixed sum every month against income that swings around, and the cashflow squeeze is obvious. You could be handing money to HMRC in a month where you’ve actually made a loss.

Before anyone panics — the important caveats

This is a consultation, not a law. Nothing has been decided, and there’s a fair distance between a Treasury discussion paper and money leaving your account.

A few things worth holding on to:

The consultation runs until 4 August 2026, with the government expected to respond in the autumn.
Even if it goes ahead, the earliest it would come in is around 2029 — this isn’t a next-tax-year problem.
The income threshold hasn’t been set, so we don’t yet know who it would actually apply to.
HMRC has said taxpayers should be able to adjust their estimates if their circumstances change, which would take some of the sting out of the “based on last year” issue — assuming it works smoothly in practice.

It’s also worth seeing this in context. It sits alongside Making Tax Digital, which from April 2026 already requires landlords earning over £50,000 to report quarterly rather than annually (that threshold drops to £30,000, then £20,000, over the following two years). Taken together, the direction of travel is clear enough: HMRC wants tax reported and paid closer to real time.

What sensible landlords are doing now

You don’t need to do anything drastic today. But a few habits will serve you well whatever happens:

Keep clean, up-to-date records — quarterly reporting alone makes that non-negotiable now. Set money aside for tax as rent comes in, rather than scrambling at deadline. And if you’ve got strong feelings either way, the consultation is open, so responding is worth ten minutes.

If the admin side of being a landlord already feels like a second job, this is one more reason to have someone in your corner who lives and breathes it.

How we can help

At Stepping Stones Letting, keeping our landlords on top of the moving parts is simply part of what we do — from compliance and paperwork to knowing what’s coming down the track before it lands. We can’t file your tax return for you, but we can make sure the rest of your lettings admin is one less thing to worry about, and point you toward good advice when you need it.

If you’d like to talk through what any of this means for your properties, give us a call on 01295 275 909 — we’re always happy to help.

This article is general information, not tax or financial advice. Speak to a qualified accountant about your own circumstances.

Sources: Property118; THP Chartered Accountants; The Independent Landlord; Landlord Today. Consultation: HM Treasury / HMRC (open 23 June – 4 August 2026).