From April 2029, self-assessment taxpayers with employment or private pension income not fully taxed through PAYE will need to pay more of their tax liability via PAYE. The change, announced in the 2025 Budget, could affect 2.1 million people, according to HMRC.
How the new system will work
Currently, those completing a self-assessment tax return report their income and pay the tax owed for the previous tax year by 31 January. A July 31 "payment on account" deadline also means some taxpayers pay 50% of their bill in advance.
Under the new proposals, people who file self-assessment and also have a job or pension paid via PAYE would no longer pay large lump sums. Instead, they would automatically pay monthly or quarterly. Taxpayers paid monthly via PAYE would pay about 8.3% of their estimated tax bill monthly through their wages or pension.
Impact on taxpayers
If a taxpayer's final bill is higher than what is collected via monthly payments, they would pay the remaining amount by January 31 2031 when they file their tax return. If they paid more than needed, the Government would issue a refund after their tax return is processed.
Consultation and next steps
A consultation ran between June 23 and August 4. Officials said: "This consultation sets out the government’s key areas of focus for changing the timing of ITSA payments, and 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; the potential for more timely payment for other ITSA taxpayers (such as those with ITSA income only); specifics on design, such as how and when to collect payments and safeguards needed to protect taxpayers; support and guidance required for taxpayers and their representatives to help them transition to new payment timing."
They 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."
