HMRC eyes in-year Self Assessment payments in 2029

HMRC has opened a consultation on more timely Self Assessment payments that could see many taxpayers pay their tax bills closer to when they earn the income. From April 2029, people who also have PAYE income could pay more of their forecast Self Assessment liability in-year through their tax code, rather than in a single lump sum the following January.

At a glance:

• The consultation runs for six weeks, from 23 June 2026 to 4 August 2026.
• The proposed in-year payment requirement would start in April 2029.
• Today, payments on account apply once a Self Assessment bill tops £1,000, with each instalment set at half of the previous year’s bill.
• Making Tax Digital for Income Tax already went live on 6 April 2026 for sole traders and landlords earning over £50,000.

Why HMRC wants tax paid sooner

The government says the aim is to line up tax payments more closely with when income is actually earned. Under the present rules, tax on some income can be paid up to around 22 months after it lands.

Commenting on the measure, Dan Tomlinson, Exchequer Secretary to the Treasury, said in his statement to Parliament: “Spreading tax payments through the year into smaller, regular payments will help reduce tax debt and avoid taxpayers having to pay larger, infrequent and sometimes unexpected bills.”

The proposal forms part of HMRC’s “Tax Update 2026”, a package of announcements made on 23 June 2026 and badged around three themes: simplification, modernisation and fairness.

How Self Assessment in-year payments would work

At the centre of the consultation is a proposal that, from April 2029, Self Assessment taxpayers who also have PAYE income would pay more of their forecast Self Assessment liability during the tax year itself, collected through their PAYE tax code.

That would affect employed people who also have untaxed income, for example rental profit, dividends, or freelance and side-hustle earnings, and who currently settle that part of their bill the following January.

A separate strand of the consultation looks at more timely payments for other Self Assessment taxpayers, such as those with Self Assessment income only, by reforming the payments on account system.

Nothing here is settled. This is a consultation, not a confirmed change in the law, and the final rules will depend on its outcome.

How the current system works

At the moment, Self Assessment runs on a backward-looking timetable. Any tax still owed for a tax year, known as the balancing payment, is due by the 31 January after that year ends.

Many taxpayers also make two payments on account, which are advance instalments towards the next year’s bill, due on 31 January and 31 July.

These apply where the previous year’s Self Assessment bill was £1,000 or more, unless at least 80% of the tax was already collected at source, such as through PAYE. Each payment on account is set at half of the previous year’s bill.

Part of a wider shift to real-time tax

The proposal does not stand alone. Making Tax Digital for Income Tax went live on 6 April 2026 for sole traders and landlords with qualifying income above £50,000, who must now keep digital records and send quarterly updates to HMRC.

The same announcement also included consultations on making Direct Debit the mandatory way to pay PAYE and VAT, on letting HMRC recover lower-value tax debts directly from bank accounts in instalments, and on reviewing how employees claim tax relief on work expenses they pay for themselves.

Together, they point in one direction: tax collected and reported closer to real time.

What it could mean for you

If you have a salary plus untaxed income, here is how the picture could change.

Say you earn £40,000 in a salaried job, with tax taken automatically through PAYE, and you also make £6,000 of profit from a rental property.

Under today’s rules, you would typically declare that rental profit on a Self Assessment return and pay the tax on it the following 31 January, perhaps with payments on account on top.

Under the proposal, more of that rental tax could instead be collected gradually through your tax code across the year, rather than in one later payment.

Because in-year payments would be based on a forecast, the estimate may not match your final position. If it is set too high, you could overpay and be due a refund; if it is too low, a balancing amount could still be owed.

That makes checking your figures, and your tax code, more important than ever.

It also changes cash flow. Paying closer to when you earn removes the long deferral that some people currently rely on to manage their money, which is one of the trade-offs the consultation is weighing against the benefit of smaller, more regular payments.

What you can do now

1. Remember that nothing has changed yet. Current Self Assessment rules still apply for the 2025 to 2026 and 2026 to 2027 tax years, and any change is years away.
2. Have your say. You can respond through the UK consultation page before it closes on 4 August 2026, and the responses will help shape the final rules.
3. Keep your records tidy. Accurate, up-to-date figures make any in-year forecast more reliable and reduce the risk of over- or underpaying.
4. Check what you may be owed under today’s rules. Tax Rebate Services has a free guide to Self Assessment tax returns that explains how the system works and how to claim any refund you could be due.

Key Takeaways

• HMRC is consulting on collecting Self Assessment tax closer to when income is earned, with a proposed start of April 2029.
• The headline change would affect people who have PAYE income alongside Self Assessment income, who could pay more of their bill in-year through their tax code.
• It is a proposal, not law. Current deadlines remain in force for now, and the consultation closes on 4 August 2026.
• In-year payments based on forecasts make checking your figures, and any refund you may be owed, more important than ever.