Possible major change to how we pay our income tax from tax year 2029

uknick

An item not generally reported In the latest budget was a proposal which will affect PAYE and self assessment tax payers.

They are proposing that self assessment taxpayers with PAYE income will pay their self assessment liabilities in-year via PAYE from April 2029.

They want to make a mandatory adjustment to your tax code to recover self assessment tax on a monthly basis.  The tax code adjustment will be made based on the previous year's non PAYE tax liability.

In effect, HMRC is shortening payment times by this move in a bid to collect money faster.  On the basis of this, one does have to ask why did they change the method of collecting tax on savings income back in 2016.

The devil will be in the detail but this is yet another sign the government and HMRC are moving towards real time tax collection.

A consultation will be published in early 2026 on how this will work, but it will clearly affect millions of taxpayers.

I'm not sure if you need to be logged in to read this;

Buried Budget PAYE bombshell sparks big questions | AccountingWEB

poseidon1

uknick said:

An item not generally reported In the latest budget was a proposal which will affect PAYE and self assessment tax payers.

They are proposing that self assessment taxpayers with PAYE income will pay their self assessment liabilities in-year via PAYE from April 2029.

They want to make a mandatory adjustment to your tax code to recover self assessment tax on a monthly basis.  The tax code adjustment will be made based on the previous year's non PAYE tax liability.

In effect, HMRC is shortening payment times by this move in a bid to collect money faster.  On the basis of this, one does have to ask why did they change the method of collecting tax on savings income back in 2016.

The devil will be in the detail but this is yet another sign the government and HMRC are moving towards real time tax collection.

A consultation will be published in early 2026 on how this will work, but it will clearly affect millions of taxpayers.

I'm not sure if you need to be logged in to read this;

Buried Budget PAYE bombshell sparks big questions | AccountingWEB

Appreciate this alert.

I am retired, a self assessment tax payer, with no sources of PAYE income.

Have been happy to pay my taxes twice a year based on my own submissions.

Was planning to take UFPLSs from an accumulating Sipp once rental income ceases ( likely next year).

The proposed measure sounds as if would have a very detrimental effect on UFPLSs net income, with the taxable element decreasing measurably in order to capture more of the tax I self assess. 

Coupled with 'make tax digital'  ( MTD) which i might become subject to if the rental income source does not cease, I can see my own future tax compliance regime becoming immeasurably more tedious and complex.

Going to have to rethink my current investing strategy to include CGT free gilt investing, together with tweaking ISAs to increase the flow of tax free income.

Dead_keen

poseidon1 said:

The proposed measure sounds as if would have a very detrimental effect on UFPLSs net income, with the taxable element decreasing measurably in order to capture more of the tax I self assess. 

Possibly, but possibly not as "The government will consult on how this change is delivered, and on timelier tax payment for Self Assessment taxpayers more widely, including those with Self Assessment income only, in early 2026" may mean you have to accelerate the payment of tax whether or not you take UFPLS.

Grumpy_chap

I really don't think we can consider an article with a click-bait headline as an independent source of commentary:

• Buried
• Budget
• Bombshell
• Sparks
• Fear

eskbanker

Grumpy_chap said:

I really don't think we can consider an article with a click-bait headline as an independent source of commentary:

• Buried
• Budget
• Bombshell
• Sparks
• Fear

Caution about credibility of sources is fair enough but to be fair the above article includes a link to a LinkedIn post by HMRC's director general for customer strategy and tax design, which it then proceeds to precis:

One of the measures in the 2025 Budget was for more timely payment for Income Tax Self Assessment from April 2029. More specifically this will require Self Assessment taxpayers with sufficient Pay as You Earn (PAYE) income to pay more of their Self Assessment liabilities via PAYE in the year the profits or income are generated. This does not change the overall amount of tax they pay, but will affect the timing and method of payment.

There are two main collection mechanisms for income tax: PAYE for employee earnings and pensions, and Self Assessment for other forms of income including self-employment and property income. Most people are in just one system, but a sizeable number of taxpayers are in both.

From April 2029, taxpayers with _both_ Self Assessment and PAYE income will pay their forecast Self Assessment tax liability through their employment or pension income via the PAYE process. These payments will be based on their previous Self Assessment liability. As currently, there will be safeguards in places meaning employers and pension providers will not deduct more than half of a taxpayer's PAYE income for any pay period.

Automating payments helps taxpayers manage their tax bills without needing to remember them, moving away from having to budget for tax bills and reducing the amount of debt HMRC has to chase up.   Under the current system, in January 2025, approximately 1.1 million payments on accounts were missed. Around a quarter of these were paid within 2 months, but the other three-quarters became debt that HMRC needed to collect.

We will consult in early 2026 on how to bring in these changes from 2029. This will include consulting on timelier payments for those with Self Assessment income _only_, such as automating payments for those without PAYE income. 

https://www.linkedin.com/posts/jonathan-athow-7a086b94_one-of-the-measures-in-the-2025-budget-was-activity-7402637804884688896-_n9a/

Grumpy_chap

eskbanker said:

Caution about credibility of sources is fair enough but to be fair the above article includes a link to a LinkedIn post by HMRC's director general for customer strategy and tax design, which it then proceeds to precis:

Thanks.

I don't use Linked In, but followed the link you shared.  As a non-user, I can't see the job title for the individual, and two further clicks indicate only that he is one of 25k odd employees of HMRC.  I am not familiar with the senior personnel at HMRC so would have to hunt if I really wanted to confirm the individual's position.

What the link does give me is the title "UK Taxpayers to Pay Self Assessment via PAYE from 2029" with a note that "This title was summarized by AI from the post below."
Far less sensationalist than the headline article linked by the OP.
I think my concern about bias in the original article remains valid.

The press know that the majority of people will see the headline and then go off moaning to their mates down the pub rather than read the article in depth and follow subsequent links.

eskbanker

Grumpy_chap said:

I don't use Linked In, but followed the link you shared.  As a non-user, I can't see the job title for the individual, and two further clicks indicate only that he is one of 25k odd employees of HMRC.  I am not familiar with the senior personnel at HMRC so would have to hunt if I really wanted to confirm the individual's position.

I didn't make any attempt to verify his role prior to posting but a five second Google returned this confirmation!

https://www.gov.uk/government/people/jonathan-athow

I do agree with your point about unhelpful tabloid-speak though, but as far as I can see, the content seems broadly accurate, and readers of AccountingWeb probably won't have many mates anyway

Dead_keen

Grumpy_chap said:

I really don't think we can consider an article with a click-bait headline as an independent source of commentary:

• Buried
• Budget
• Bombshell
• Sparks
• Fear

Sorry, should have said that my quote came from a government document called OOTLAR - see para 2.51 here: https://www.gov.uk/government/publications/budget-2025-overview-of-tax-legislation-and-rates-ootlar/budget-2025-overview-of-tax-legislation-and-rates-ootlar

uknick

For those of you that are cynical about the previous referenced articles, how about straight from the horse's mouth?

Budget 2025 (HTML) - GOV.UK

In section "5.9 Closing The Tax Gap", it says

"More timely payment for Self Assessment – The government will require income tax Self Assessment taxpayers with Pay As You Earn (PAYE) income to pay more of their Self Assessment liabilities in-year via PAYE from April 2029. The government will publish a consultation in early 2026 on delivering this change, and on timelier tax payment for those with only Self Assessment income."

And yes, personally speaking, I am a reader of AccountingWeb and don't have any friends 

poseidon1

As an ex professional in the tax advisory sector, I certainly did not see the article as click bait. Ordinary members of the public are hardly going to stumble over an article written for the professional tax service sector.

In any event the ICAEW ( link below) covered the same proposal  in their bulletin to members with some further information on how much  HMRC expect to collect via the proposed new measures, as well as flagging their desire to collect tax earlier from pure self assement tax payers with no PAYE (MTD for self assessment tax payers on the horizon?).

As I said,  I appreciate the heads up on a proposal that  apparently was not flagged  by the popular press.  Forewarned is forearmed.


https://www.icaew.com/insights/tax-news/2025/nov-2025/budget-key-changes-to-income-tax-administration-payments-and-penalties

DRS1

I have to say that I thought quarterly reporting under MTD was almost certain to lead to quarterly payment of tax.  But could it lead to quarterly changes to your tax code?  This feels like another complication to an already complicated system.