Timely Payments for Self Assessment taxpayers
Following a consultation over the summer, the Chancellor confirmed that, with effect from April 2029, income tax due on non PAYE income such as self employed profits, rental income and investment income, will be payable more regularly than the current January and July each year.
Whilst the original plan was for the payments to be collected via the PAYE system where possible, the government has listened to concerns about this approach. Accordingly, the default option will be automated in-year payments (such as through Direct Debit), with the option for eligible taxpayers to opt-in to payments through PAYE if so desired. HMRC states that this approach will provide flexibility for taxpayers, whilst retaining the benefits of smaller, more regular payments closer to the point at which income is earned.
Automated in-year payments will apply to all Self Assessment taxpayers who are liable to make Payments on Account.
However, the details are not yet final: in particular it is not clear how often that payments will be required.
Whilst the PAYE option would be a monthly payment, it would seem sensible to otherwise link the payments to the MTD for Income Tax system aligning quarterly payments to the quarterly returns required. This would also tie in with the statement that new digital tools will be made available to help taxpayers estimate their liability and make the payments due.
HMRC are to work with stakeholders in finalising the new rules over the next few months.
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