A new HMRC consultation could change how millions pay their Self Assessment tax. From April 2029, anyone with both a PAYE job and Self Assessment income (think: employed plus a side business, freelance work, or rental income) could see their tax deducted directly from their pay each payday, instead of arriving as lump sums in January and July.
By Chris Davies – Partner
Around 2.1 million people are expected to fall into scope. The employer would deduct an instalment based on the last tax return, The forecast could be update for changes, and any gap gets settled the usual way when the end of year return gets filed. Whilst this doesn’t increase the tax owed it will have a significant impact on cashflow particularly foor those business with fluctuating seasonal cashflows.
Self-employed people and landlords with no PAYE income aren’t covered by this specific change. For that much larger group (around 9.5 million people). Instead HMRC is exploring whether to move twice-yearly Payments on Account onto a monthly or quarterly cycle.
This would be a real step change in the way that tax is collected, but with the recent introduction of quarterly reporting under Making Tax Digital for Income Tax is one that many of us have foreseen as inevitable for some time.
Do get in touch if you would like help with your self assessment tax return.
