City law and accountancy firms face cash flow crunch in HMRC shake-up

The government plans to replace twice-yearly self-assessment payments with more regular income tax payments from April 2029. The change aims to collect tax closer to when income is earned and reduce late payments, but professional services firms warn it could put pressure on their cash flow.

Law, accountancy and consulting partnerships may need to pay tax on partners’ shares of profits before clients have paid their bills, potentially forcing some firms to use overdrafts or working capital loans. UK law firms averaged 134 days of lock-up in 2026, while the government says about 12 million people file self-assessment returns, generating £48 billion in income tax in 2024–25. The payment schedule is still undefined, with further HMRC guidance expected in 2027.