John Healey urged to scrap 'double tax' payment plans hitting three million workers

John Healey urged to scrap 'double tax' payment plans hitting three million workers Businesses could be forced to borrow more money or close down, putting jobs and economic growth at risk, FSB warns Sign up to the Money Newsletter I agree to receive updates and information about my account, the GB News Community, and related products and services from GB News. Email address Sign up By signing up you agree to the Terms and Conditions and Privacy Policy and Community Rules.

Thank you for signing up! See the latest from GB News here . Choose GB News on Google - add us as a preferred source Choose GB News Support GB News Champion free speech and independent journalism while unlocking exclusive benefits. Support us Around three million self-employed workers face a "double tax" squeeze under a planned shake-up. Some could be forced to borrow money just to keep their businesses going. The workers face two tax bills in a single year in 2029, when changes to self-assessment announced in Chancellor John Healey's Budget overlap with existing payment schedules.

The Federation of Small Businesses has launched a furious attack on the plans, calling them "completely unworkable" in a letter to the Treasury. The FSB, which represents 5.5 million small business owners and self-employed people across the country, warned that hundreds of thousands of workers could have to borrow to keep trading. The overlapping payments will give the Treasury a one-off £17billion cash boost in 2029-30, the Office for Budget Responsibility estimates.

The overlapping payments will give the Treasury a one-off £17billion cash boost in 2029-30 | GETTY In its letter to James Murray, the financial secretary to the Treasury, the FSB said the proposals amounted to "a year of double taxation" that would undermine investment and threaten growth. Under the current "payments on account" system, self-employed taxpayers must settle their outstanding bill from the previous tax year by 31 January, while also making a 50 per cent advance payment towards the following year's liability.

The remaining half is then due by 31 July. Mr Healey's new Timely Payments System replaces this arrangement with monthly or quarterly instalments based on the prior year's tax bill, starting from April 2029. The pressure comes from the overlap between the two payment systems. During the transition year, workers would still have to pay tax under the old system while starting payments under the new one. Someone with an annual tax bill of £20,000, for example, could owe £10,000 in January 2029 and another £10,000 in July.

They could also face monthly instalments of roughly £1,666 from April onwards. That could bring close to two years' worth of tax payments into a much shorter period, putting extra pressure on business finances. Some businesses are already borrowing at rates of 11 per cent to cover gaps in their cashflow, nearly three times the Bank of England base rate, the FSB said. A double payment year would add to that strain. Irregular earnings could make the change particularly difficult for self-employed workers.

The FSB said: "Self-employed people often experience intermittent irregular payments, a veritable 'feast or famine', with a big payment one month, then low income for the next few." Claire Tindal, 57, an executive coach and school inspector from Devon, left a 30-year teaching career in 2023 and has experienced those pressures. Ms Tindal said: "I had a feast period over the summer, but I am in a famine period where a load of invoices have gone out, but I haven't been paid yet."

She added: "The bank account has got a bit of dust at the bottom of it." Ms Tindal said she has limited savings after taking out a mortgage to buy her ex-husband out of their home, and would struggle to absorb an additional tax demand in 2029. Mr Healey's new Timely Payments System replaces this arrangement with monthly or quarterly instalments based on the prior year's tax bill, starting from April 2029 | GETTY Opposition politicians have joined the chorus of criticism.

Andrew Griffith, the shadow chancellor, described the policy as "anti-business" and accused the Government of forcing self-employed workers to hand over money they have not yet earned. "Labour should think hard about the 2029 overlap year and the impact a year with two tax bills could have on hard-working people," Mr Griffith said. Daisy Cooper, the Liberal Democrats' Treasury spokesperson, warned that some workers might simply decide it was no longer worth continuing.

"If many decide that it's no longer worth working once they've covered their tax bill, or are forced to shut up shop altogether, it will be growth that takes the hit," Ms Cooper said. The Association of Independent Professionals and the Self-Employed has gone further, calling for a complete reversal. John Toovey from the organisation said: "That's a squeeze on businesses that have done nothing wrong. The government should think again."

The changes arrive against a backdrop of declining self-employment in Britain. Official figures show the number of self-employed people and sole traders fell by 157,000, or 3.7 per cent, in the year to January 2026. The FSB called these "missing entrepreneurs, missed economic activity and missed wealth creation." MRC lost £12.9billion through write-offs and remissions that year alone | GETTY Meanwhile, tax debt has ballooned to £43.8billion in 2025-26, nearly triple the £15billion recorded before the pandemic.

HMRC lost £12.9billion through write-offs and remissions that year alone. Chris Etherington from accountancy firm RSM suggested the Government could ease the transition by relaxing interest charges and late payment penalties during the overlap year. The Government has pledged to introduce digital tools from 2028 to help taxpayers estimate their liabilities ahead of the switch. A Government spokesman said: "No one will owe more tax, and moving to smaller, more regular payments will make it easier for millions of taxpayers to manage their money and avoid the shock of large tax bills."

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