7th July 2026
HMRC has launched a consultation on proposals that could require most UK businesses to pay their VAT and PAYE liabilities by Direct Debit in the future, replacing many of the payment methods businesses currently use. The consultation runs until 16 August 2026.
HMRC says the proposals are intended to modernise the way tax is collected, simplify the payment process, reduce late payments and make tax collection more efficient. By collecting payments automatically via Direct Debit, HMRC believes it could reduce administrative costs for both businesses and the tax system. However, many businesses and professional bodies have raised concerns about the potential impact on cash flow and the loss of flexibility in managing tax payments.
If introduced, this would represent a significant change for many businesses. Those that currently schedule VAT and PAYE payments to support cash flow or use payment methods other than Direct Debit may need to review their processes and cash flow planning.
For now, there is nothing businesses need to do, but it’s worth being aware of the proposal and considering how it could affect your business if it goes ahead.
If you’d like to discuss how these proposals could impact your business, please get in touch with the Thompson Jenner team.
