UK Self Assessment Timely Payments: HMRC Consultation on In-Year Tax from 2029

On 23 June 2026 HMRC opened a six-week consultation on Timely Payments in Income Tax Self Assessment (ITSA), implementing a Budget 2025 commitment to collect more tax during the year income is earned rather than after the tax year ends.

From April 2029, Self Assessment taxpayers with sufficient PAYE income — typically from employment or pensions — would pay forecast ITSA liabilities through their tax code each pay period. The consultation also explores monthly or quarterly payments on account for taxpayers without PAYE income, such as sole traders and landlords.

HMRC would use the taxpayer's most recent filed return to forecast the ITSA liability for the current year and divide it into equal in-year deductions via PAYE. For 2030–31, for example, payments could initially be based on the 2028–29 return.

Taxpayers could update forecasts online if they expect materially higher or lower income — reducing the risk of large under- or over-payments. HMRC proposes capping the ITSA portion collected through PAYE at 50% of PAYE income in any pay period, and invites views on whether that cap needs flexibility.

This expands today's voluntary 'ITSA via PAYE' scheme, which many eligible taxpayers do not use. Employers and pension providers would administer deductions alongside existing PAYE, adding payroll complexity for staff with side businesses or rental income.

For ITSA-only taxpayers — common among full-time sole traders and landlords — the consultation explores increasing payment frequency from twice-yearly to monthly or quarterly, and aligning payments with the tax year in which income arises rather than the following year.

Transitional rules for new traders, fluctuating income, and complex cases (including carried interest now within income tax from April 2026) are open for comment. HMRC acknowledges irregular income streams need safeguards against cash-flow shocks.

The policy sits alongside Making Tax Digital for ITSA and June's separate consultations on mandatory VAT/PAYE Direct Debit — together signalling a shift toward continuous compliance and earlier settlement.

The consultation runs from 23 June 2026 to 11:59pm on 4 August 2026. Responses can be submitted via the GOV.UK portal, emailed to [email protected], or posted to HMRC's Timely Payment Team in Manchester.

Implementation is targeted from April 2029, giving software providers, agents, and employers roughly three years to adapt systems after legislation is confirmed. No changes affect 2026–27 payment on account deadlines or the 31 July 2026 balancing payment date.

Trade bodies, payroll bureaux, and representative organisations are encouraged to respond on behalf of members with variable or seasonal income.

Side-hustle employees: model how PAYE code adjustments would affect monthly net pay if rental or freelance profits are collected in-year from 2029.

Sole traders and landlords: review cash-flow under monthly or quarterly payment scenarios instead of January and July lump sums — build reserves if your income is seasonal.

FinnAccountings Self Assessment Agent drafts returns and forecasts liabilities from live ledger data — start a free trial to stress-test payment timing before 2029 reforms take effect.