Corporate report

Timely payments in Income Tax Self Assessment factsheet

Published 23 June 2026

What is this about?

Approximately 12 million individuals file a Self Assessment tax return each year, for example because they are self-employed. Around 7 million of these taxpayers also have Pay as You Earn (PAYE) income because they are employed or receive a pension.

Tax on PAYE income is paid by employers and pension providers each month to HMRC, whereas tax on any Self Assessment income is paid by individuals up to 22 months after it is received. This can mean taxpayers having to pay large, unexpected sums with the risk of falling into debt. Approximately one in five of Income Tax Self Assessment tax bills are paid late, which can end up costing taxpayers more money through penalties and interest.

Income Tax Self Assessment Payments through PAYE

What is changing?

At Budget 2025 the government announced that from April 2029 Self Assessment taxpayers who also have PAYE income will need to pay towards their Self Assessment tax bill through their regular PAYE payments, rather than waiting until later in the year or until they file their tax return.

No one will pay more tax than they currently do, the timing will just change. Paying in smaller, more frequent instalments will support better planning and budgeting and avoid taxpayers having to pay larger, infrequent and sometimes unexpected bills.

The government is consulting on how to deliver this change to protect and support impacted taxpayers and help them transition to new payment timing.

Who will this impact?

Self Assessment taxpayers with PAYE income, such as from employment or a pension, will need to pay towards their Self Assessment tax bill through their PAYE income, where they have enough income to do so, from April 2029.

Why is this changing?

The aim is to smooth out tax payment and help taxpayers avoid unexpected or large tax bills. Late payments are in some cases linked to the current timing and structure of payment arrangements (with delays of up to 22 months from when they receive income to when the relevant tax is paid), which can be difficult for some taxpayers to budget and pay on time. This means there is a greater risk of individuals falling into tax debt.

Under the current system, approximately 1.1 million Payments on Account were missed in January 2025 with the taxpayer falling into tax debt in 75% of cases. Tax debt can be costly for individuals, as it can lead to penalties and interest. If a final Self Assessment tax bill is paid late there is a penalty of 5% of the tax unpaid at 30 days, 6 months and 12 months, plus interest on the amount owed. By paying more frequently in smaller, easy to manage payments, the risk of additional costs associated with debt for individuals should decrease.

By comparison with current Self Assessment arrangements in the UK, many other countries including the United States, Canada, France, Germany and Australia, collect tax much sooner.

How will it work?

For individual taxpayers with both Self Assessment and sufficient PAYE income:

• HMRC will use your most recent tax return to forecast your payments
• where possible, HMRC will update your tax code, which will determine how much Self Assessment tax is collected through your PAYE income alongside your existing tax on your employment or pension
• if taxpayers know their tax will be significantly higher or lower than forecast, they will be able to make their forecasts and in-year tax payments more accurate by contacting HMRC by using an easy online form
• taxpayers will file a tax return, as usual, by 31 January following the tax year alongside paying any remaining tax still due

These reforms are separate, but complementary to Making Tax Digital, which is focussed on helping taxpayers manage their business and tax affairs more easily through better record keeping, forecasting and more regular reporting. By making more timely payments, the measure will help taxpayers to budget and avoid falling into tax debt.

As well as seeking views on the practical elements of how the change is delivered, the consultation launched on 23 June 2026 is part of ensuring taxpayers and those impacted are sufficiently supported. For example, the government recognises that some Self Assessment taxpayers have complex and fluctuating income which needs to be carefully considered in the design of this new policy.

For taxpayers and agents, this support could include:

• easy to follow guidance
• support with preparing to smooth tax payments in the transition period
• safeguards to protect taxpayers

For employers:

• where possible, HMRC will update tax codes which will inform how much Self Assessment tax is to be collected
• employers will continue to deduct tax from their employees for each pay period

Potential reform of direct Payments on Account

While some Self Assessment taxpayers make just one payment by 31 January after the tax year ends, around 3 million Self Assessment taxpayers already need to make 2 ‘Payments on Account’ each tax year towards their tax bill:

• the first Payment on Account payment happens in January, during the tax year it relates to
• the second Payment on Account payment happens in July in arrears, which means this is paid 4 months after the tax year ends
• if the 2 payments do not fully cover the tax liability, a balancing payment is also due by 31 January the following year

The government would like to explore the potential for comparable reforms for other Self Assessment taxpayers by increasing the frequency of Payments on Account. For taxpayers, this would smooth payments across the year, helping them to avoid large, infrequent payments that can be difficult to manage. No decisions have yet been made about potential changes to payments for this group of Self Assessment taxpayers.

Next steps

The 23 June 2026 consultation asks for input on how changing the timing of Self Assessment payments for those with PAYE income might be implemented from April 2029. It also explores the potential for changes to move to more timely payment for other Self Assessment taxpayers, such as those with only Self Assessment income.

The government wants input on how to best support taxpayers, agents, employers and pension providers and asks for views on:

• how and when to set payments
• the appropriate safeguards to protect taxpayers
• how the transition towards the reformed systems could work and how to best support taxpayers through this period
• what support and guidance taxpayers will require
• any additional safeguards employers, pension providers or payroll professionals may need to help manage these changes

A summary of responses will be published in Autumn 2026.