The small print in the Budget Red Book shows HMRC is planning an overhaul of self-assessment system with in year payment set to be introduced.
HMRC will require income tax self-assessment taxpayers with PAYE income to pay more of their self-assessment liabilities in-year via PAYE from April 2029.
A consultation will be published in early 2026 on how this will work, but it will clearly affect millions of taxpayers.
HMRC is also looking for 'timelier' tax payments from those with only self-assessment income. In effect, HMRC is shortening payment times by this move in a bid to collect money faster.
The devil will be in the detail but this is yet another sign that the government and HMRC is moving towards real time tax collection. This is also exemplified by the plan to make e-invoicing mandatory for all businesses, regardless of size and complexity, in 2029.
The challenge with giving self-assessment tax a PAYE-style payment routine is that income for self-employment is unpredictable . One quiet winter, one gap between contracts, one slow season - or a fluctuation in rental income or dividend income and the numbers shift overnight.
Real-time, accurate bookkeeping will become essential to making this work as it's impossible to set regular payments that actually reflect reality without it. This probably means more work for accountants and it will come with a cost.
Let's see what the consultation has to offer!
Peter Nichols - Tax Director BFN Accounts & Tax
http://www.bfnaccounts.com