Changes planned for self-assessment payments

by Jon Lacey

Big changes are on the horizon for self-assessment. HMRC has launched a new consultation on ‘timely payments’, detailing plans that could see those in self-assessment, who also have PAYE income, moved away from the traditional January and July deadlines. Instead, their tax payments will be collected throughout the year directly from their wages. This change is likely to be implemented in April 2029.

What is changing?

The Government’s goal is to align tax payments more closely with when you actually earn your money. While the total amount of tax you owe won’t increase, the payment timeline is shifting.

HMRC is splitting taxpayers into two distinct groups for these plans:

1. The Proposed April 2029 Change: Tax collected via your day job (PAYE)

If you are employed but also have other income – such as freelance work or rental income – HMRC will use the payroll system to collect your self-assessment tax automatically.

• How it works: Your estimated tax liability for your extra income will be deducted directly from your salary each payday.
• The basis: Deductions will be calculated using your most recent tax return. If your income changes, you will be able to update your forecast.
• Reconciliation: You will still file a year-end tax return to calculate your exact liability, resulting in a final balancing payment or a refund.

2. Under Consideration: More frequent direct payments

For self-employed individuals, business owners, or landlords without PAYE income who are in self assessment, changes are not yet set in stone. However, HMRC is actively exploring options for this group.

• The proposal: HMRC is looking into replacing the current system of two payments on account (in January and July) with more frequent direct payments, potentially on a monthly or quarterly basis.
• The aim: The revenue authority believes this would smooth out cashflow, making it easier to manage than saving up for twice-yearly bills.

What this means for you

If you straddle the worlds of employment and self-employment, April 2029 looks set to bring a fundamental shift in how you manage your monthly income.

Instead of looking backward at what you earned in the previous tax year, you will need to keep a much closer, real-time eye on your current income. Staying on top of your digital bookkeeping throughout the year will be essential to ensure your PAYE tax codes and deductions remain accurate.

We are here to help

Please get in touch with our team if you would like support or have any questions about how these future changes might affect your finances.