HMRC has confirmed that proposals to change the timing of self-assessment tax payments could affect around 2.1 million of the UK's 12 million self-assessment taxpayers. The changes, which are scheduled to come into effect from April 2029, would move tax payments much closer to when income is actually earned, according to a consultation launched by the Labour Party government.
The consultation, which is currently underway, explores two main routes for collecting Income Tax Self Assessment (ITSA) liabilities. Taxpayers with income through PAYE, whether from employment or a private pension, would have their forecast ITSA liability collected in monthly instalments through their tax code, worth 8.3 per cent each month, with a balancing payment the following January if needed.
Who is affected by the proposed changes
HMRC estimates that roughly 2.1 million taxpayers would fall into this group. For those without a PAYE income to draw on, the consultation explores making payments on account more frequent, moving to monthly or quarterly instalments rather than the current twice-yearly arrangement. A lower £1,000 threshold is also being considered, which would pull more taxpayers into the system altogether.
Joshua Leigh & Co, the accountancy firm, explained that the government wants to move payment much closer to when the income is actually earned, starting from April 2029. The rationale behind the change is, perhaps, reasonable, according to the firm.
HMRC consultation details and timeline
HMRC said: "This consultation sets out the government’s key areas of focus for changing the timing of ITSA payments." It seeks views on "the proposed design of reforms for ITSA taxpayers with PAYE income who will be required to pay their forecasted ITSA liability in-year from April 2029" and "the potential for more timely payment for other ITSA taxpayers (such as those with ITSA income only)."
It also wants to know feedback on "specifics on design, such as how and when to collect payments and safeguards needed to protect taxpayers" and "support and guidance required for taxpayers and their representatives to help them transition to new payment timing."
Why the government is making the change
Joshua Leigh & Co added: "The rationale behind this change is, perhaps, reasonable. Around one in five ITSA bills are paid late under the current system, often because the size of the January bill catches people out. Spreading that liability across the year in smaller amounts could make budgeting easier for taxpayers who currently find it hard to set money aside for a lump sum. Many people are now used to paying many of their other bills in smaller monthly or quarterly instalments and the information provided by quarterly MTD reporting will allow HMRC to build a better picture of a person’s liabilities."
HMRC added: "The government will analyse the views submitted to this consultation and publish a response in Autumn 2026. Any relevant legislation will be introduced in a Finance Bill ahead of implementation in April 2029."
