CP500 Tax Instalments for Malaysian Freelancers 2026: Pay, Revise, Avoid Penalties

This article is general information current as of June 2026 and is not individual tax advice. Confirm your obligations with the Inland Revenue Board of Malaysia (LHDN) and the MyTax portal.

If you earn business or freelance income in Malaysia, you may receive a CP500 notice from LHDN asking you to pay your income tax in instalments throughout the year, rather than in one lump sum at filing time. Understanding CP500, knowing the 2026 due dates, and revising the amount when your income changes can save you both cash flow stress and penalties. With the first revision deadline falling on 30 June 2026, now is the time to act.

What Is CP500?

CP500 is a prepayment scheme. It is a notice of instalment payments issued by LHDN to individuals who earn income that is not subject to monthly salary deductions, such as business profits, freelance fees, rental, royalties, interest, and commissions. LHDN estimates your tax for the year based on your past assessments and splits it into six bimonthly instalments. When you file your return, these instalments are credited against your final tax bill.

Who Receives a CP500?

The scheme is aimed at taxpayers with non-employment income. This includes sole proprietors and small business owners, freelancers and gig workers, landlords with rental income, and commission-based professionals. If LHDN has assessed business income from you before, you are likely to receive a CP500 for the following year. Salaried employees with a growing side income are increasingly brought into the scheme too.

The 2026 Payment Schedule

CP500 instalments fall on six bimonthly dates across the year, in March, May, July, September, November, and January. Each instalment is due by the stated date, and payment can be made through FPX or online banking. When paying online, select the payment type CP500 Bayaran Ansuran so the amount is credited correctly. Missing a due date normally attracts a late payment increase, so set reminders for each one.

The 2026 Penalty Waiver

For the 2026 transition period, LHDN has waived the penalty for non-payment of CP500 instalments for Year of Assessment 2026. This is helpful relief, but be careful about what it means. The penalty is waived, not the tax itself. If you receive a CP500 for the first time, the underlying tax is still due. Treat the waiver as breathing room to organise your cash flow, not as permission to ignore the bill.

How to Revise Your Instalments with CP502

If LHDN estimate is too high or too low compared with your actual expected income, you can revise the instalments using Form CP502. This matters: paying too much ties up cash you need, while paying too little can leave a large balance at filing time. For Year of Assessment 2026, the revision deadlines are 30 June 2026 for the first revision and 31 October 2026 for the second. Submit your revised estimate before these dates through your tax office or the MyTax portal.

Why Accurate Records Make Revision Easier

To revise sensibly, you need a realistic projection of your taxable income, which means knowing your revenue and deductible expenses to date. This is where tidy records pay off. Tools like Denpyo let you photograph receipts throughout the year, with AI extracting the date, amount, and category automatically, so you can see your running profit at any time. With that figure, you can estimate your tax with the income tax calculator and check whether a cost is claimable using the expense deductibility checker before you submit a CP502.

Worked Example

Suppose LHDN issues a freelance consultant a CP500 estimating RM12,000 of tax, payable as six instalments of RM2,000. Midway through the year, a major client ends and the consultant expects far lower profit. By submitting a CP502 before 30 June 2026 with a realistic lower estimate, the remaining instalments are reduced, freeing up cash. Conversely, a freelancer whose income jumps could revise upward to avoid a large balance and any underestimation penalty at filing time.

Summary

CP500 is LHDN bimonthly instalment scheme for non-employment income, paid across six dates in March, May, July, September, November, and January. For Year of Assessment 2026, the penalty for non-payment is waived, but the tax remains due. If the estimate does not match your reality, revise it with Form CP502 before 30 June 2026, or 31 October 2026 for a second revision. Keep accurate, digitised records so your revision and your final return both rest on solid numbers. For official guidance, visit the LHDN website.