Self Assessment in-year payment reform

Budget 2025 included an announcement that Income Tax Self Assessment (ITSA) taxpayers with Pay As You Earn (PAYE) income would be required to pay more of their Self Assessment liabilities in-year via PAYE from April 2029. 

• The government is now consulting on how the proposed changes might be implemented, but is also exploring the potential for more timely payment for other ITSA taxpayers.

Key points from the consultation are summarised below.

ITSA payments through PAYE

From April 2029, taxpayers with sufficient PAYE income will be required to make ITSA payments, based on their forecasted ITSA liability, through PAYE each payday.

• The taxpayer's forecasted ITSA liability will be based on their last filed tax return and divided into equal payments. 
• Taxpayers will be able to update their forecast with more recent information and their required payments will adjust accordingly.
• It is proposed that the amount of tax that can be collected through PAYE in any pay period would be capped at 50% of PAYE income. Views are sought on whether there needs to be flexibility to this threshold.

Employers collect PAYE, and these changes will create work for them. For instance, tax codes may change more frequently and employers currently paying PAYE quarterly may be required to switch to monthly payments.

• The consultation seeks views on the additional support and guidance employers may need.

Potential reform of Payments on Account (POA)

The government is looking to increase the frequency of POAs from April 2029, perhaps monthly or quarterly, and to bring POAs forward so that they are paid in the same tax year as the taxable activity is carried out.

• The proposed direct ITSA POAs would be forecast based on past Self Assessment returns, but taxpayers would be able to update their forecast easily if necessary.
• The actual tax liability would be reported, and balancing payments and repayments would be handled when the Self Assessment return is completed.

Under the proposals, taxpayers would continue to be able to contact HMRC to request a change to their POA amount if it no longer reflects their liability.

• The government is also considering how wider use of payment plans could support better payment management.

Issues affecting both taxpayers with and without PAYE income

Transitional arrangements:

• 2029-30 would be a transition period, as liabilities due under the new payment schedule would need to be paid alongside those due under the existing payment schedule.
• Options being considered to help with the transition include:
  • Advance payment options, such as a Budget Payment Plan.
  • Spreading the previous tax year's liability over a longer time frame.
    • For example, the July POA might be spread evenly over four, six or 12 months, in addition to the 2029-30 in-year payments.

Newly registered or returning ITSA taxpayers:

• Those who are new or returning to ITSA may not have a reliable forecast of their income, making it difficult to establish accurate, regular payments.
  • It can be up to 22 months before a new trader starts paying tax. Suggestions are invited on how new or returning taxpayers can make timely payments and how an appropriate liability amount could be estimated.

Potential changes to POA criteria:

• The government is considering reducing the £1,000 threshold for POAs.

Making a choice between ITSA payments through PAYE and direct ITSA POAs:

• Suggestions are invited as to the circumstances that could be considered in offering taxpayers the choice between making ITSA payments through PAYE or making direct ITSA POAs.

The impact on agents' role and support:

• The consultation acknowledges that the proposals will add extra work for tax agents, such as updating their clients' forecasts based on in-year changes.
  • The government is inviting suggestions on what agents would find useful in carrying out their role under the changes.
• Views are also being sought on the support and guidance needed to help taxpayers and agents in transitioning to the new system.

The consultation closes on 4 August 2026. Responses can be made by:

• Using the Online form
• Emailing This email address is being protected from spambots. You need JavaScript enabled to view it.
• Writing to: Helen Derbyshire, Timely Payment Team, HM Revenue and Customs, Trinity Bridge House, 2 Dearmans Place, 4th Floor, Manchester, M3 5BS.

Useful guides on this topic

Payments On Account (POAs): Self Assessment
When are Payments On Account (POAs) made under Self Assessment? How are POAs calculated? What are the consequences of not making a payment on time? Can POAs be reduced?

Collecting tax debts via PAYE
When can HMRC collect tax debts via PAYE? What are the graduated limits?

Time to Pay agreement
Businesses and self-employed taxpayers with outstanding tax liabilities may be eligible for support with their tax affairs through HMRC’s Time To Pay service.

External link

Timely payments in income tax Self Assessment

Question 1: What are the benefits of the proposed approach, or are there alternative suggestions that would achieve the same policy objective?

Question 2: What are the challenges of the proposed approach, or are there alternative suggestions that would achieve the same policy objective?

Question 3: Should the government use, or give the option to use, anything else (for example, MTD quarterly updates and, in the future, reputable third-party data) to inform the forecasting approach for this change?

Question 4: What other safeguards should the government consider?

Question 5: Which groups of taxpayers would find a different threshold helpful?

Question 6: Do employers and other payroll operators need additional safeguards for these changes?

Question 7: What support or guidance might employers benefit from?

Question 8: Are there other impacts for payroll operators that the government should consider?

Question 9: What options should the government consider to support taxpayers who might move in and out of paying their ITSA liabilities via PAYE?

Question 10: What potential approach, including frequency of payments, would be most appropriate to achieve the policy objective, taking account of different taxpayer circumstances?

Question 11: What could the impact of more frequent payments be on taxpayers?

Question 12: If these changes were introduced, what additional measures could the government consider to support taxpayers when their Self Assessment income changes during the year?

Question 13: How else might the government support taxpayers to manage more regular payments?

Question 14: Which groups of taxpayers might require additional support to access or use payment management tools?

Question 15: How might the government best support taxpayers to manage the transitional period?

Question 16: Would the option to make voluntary pre-payments, ahead of implementation, be helpful?

Question 17: If changes were made, what transition period would be most appropriate?

Question 18: What other support would help ITSA taxpayers during the transition period?

Question 19: How might the government best support new or returning taxpayers to make timely payments when they start earning ITSA income?

Question 20: How might estimating appropriate liability for new or returning ITSA taxpayers be achieved?

Question 21: What could be the impact of reducing the POA threshold, or are there alternative ways to support taxpayers below the current threshold to achieve the timely payment objectives?

Question 22: In what circumstances could the government consider offering taxpayers with PAYE and ITSA income the choice between making ITSA payments through PAYE, or direct ITSA POAs, such as via Direct Debit?

Question 23: What would agents find useful to enable them to carry out their role effectively under the announced changes or possible reforms?

Question 24: What support or guidance might be most effective for taxpayers with particular challenges and needs?

Question 25: What extra support or guidance might taxpayers who qualify for financial support from the government (such as Universal Credit) need?

Question 26: What support or guidance might be most effective for tax agents?

Question 27: Are there any additional comments you would like to make regarding the ‘timely payments in ITSA’ announced changes and possible reforms?