The Self Assessment payment reform is an HMRC proposal, consulted on from 23 June to 4 August 2026, to collect Income Tax Self Assessment sooner: from April 2029, taxpayers who also have PAYE income would pay towards their Self Assessment bill through their tax code as they earn, and others could move from twice-yearly payments on account to monthly or quarterly in-year payments. It is a consultation, not law. Nothing changes yet: your current payments on account and the 31 January and 31 July deadlines still apply exactly as before.
Because the headlines around Tax Update 2026 have made "millions face paying tax earlier" sound imminent, this guide sets out precisely what was proposed, who would be affected, the scale HMRC is working with, and the concerns raised by the CIOT, with a worked example so you can see how paying through PAYE would differ from today's payments on account.
What is the Self Assessment payment reform?
On 23 June 2026 HMRC published a consultation titled "Timely payments in Income Tax Self Assessment". It closed on 4 August 2026, with a summary of responses expected in autumn 2026. Any resulting changes would take effect no earlier than April 2029.
The aim is to reduce the gap between earning income and paying tax on it. At the moment, a self-employed profit made in, say, June 2027 is not fully paid off until the balancing payment on 31 January 2029. HMRC wants to shorten that lag, which it frames within the wider "simplification, modernisation and fairness" agenda of Tax Update 2026.
What exactly is HMRC proposing?
There are two distinct proposals, and which one touches you depends on whether you have PAYE income.
Proposal 1: pay through your tax code (if you have PAYE income)
Self Assessment taxpayers who also receive PAYE income, from employment or a pension, would pay towards their Self Assessment bill through their PAYE tax code as they earn, from April 2029, where they have enough PAYE income to do so. HMRC would adjust your tax code so the extra tax is collected alongside your normal PAYE, spreading it across the year rather than in two lump sums.
Proposal 2: more frequent in-year payments (if you have no PAYE income)
For people without PAYE income, the fully self-employed and landlords who cannot be coded out, HMRC is exploring replacing the current twice-yearly payments on account with more frequent monthly or quarterly in-year payments. This part is far less developed and nothing has been finalised.
Current rules vs the proposal: a comparison
The table below contrasts how Self Assessment is paid today with what HMRC has floated for April 2029.
| Feature | Now (still applies) | Proposed from April 2029 |
|---|---|---|
| When you pay | Balancing payment 31 January; payments on account 31 January and 31 July | As you earn, through your tax code (PAYE group) or monthly/quarterly (non-PAYE group) |
| How much per instalment | Each payment on account is normally 50% of the previous year's tax bill | Spread across the year via your coding notice or in-year instalments |
| Who it affects | Everyone in Self Assessment with a bill over the threshold | Split: those with PAYE income vs those without |
| Status | Legally in force | Consultation only; not law; earliest start April 2029 |
Who would be affected, and how many people?
The scale figures from the gov.uk factsheet put the reform in context:
- Around 12 million individuals file a Self Assessment return each year.
- About 7 million of these also have PAYE income (employment or pension).
- Roughly 2.1 million people have enough PAYE income to fall under the pay-through-PAYE category.
- Around 2.5 million pay via direct payments on account.
- Approximately one in five Self Assessment tax bills are paid late.
- Around 1.1 million payments on account were missed in January 2025.
Those late-payment numbers are a large part of why HMRC wants change: collecting tax closer to when income arises should, in HMRC's view, reduce missed deadlines and the interest and penalties that follow. If you want to understand your own liability first, see how your Self Assessment bill is calculated.
Worked example: payments on account vs paying through PAYE
Meet Priya, who has a part-time PAYE salary and a freelance side business. Her total Self Assessment tax and Class 4 National Insurance for 2026-27 comes to £4,000, and she owed a similar amount the year before, so payments on account apply.
Under today's rules (unchanged)
- 31 January 2028: balancing payment for 2026-27, plus a first payment on account for 2027-28 of £2,000 (50%).
- 31 July 2028: second payment on account for 2027-28 of £2,000 (50%).
Two lump sums, six months apart. If she misses one, she joins the 1.1 million who missed a January payment on account, and interest starts running.
Under the proposal (from April 2029, illustrative)
Because Priya has enough PAYE income, HMRC would adjust her tax code so the £4,000 is collected gradually through her salary across the year, roughly £333 a month alongside her existing PAYE. No 31 January or 31 July lump sum for that element; the tax leaves her pay packet as she earns.
The total tax is the same. What changes is the rhythm: many smaller deductions instead of two large dates. For a steady earner that smooths cash flow. For someone whose income lands late in the year, it can mean paying before the money arrives, which is exactly the concern the professional bodies raised.
Why does HMRC want this change?
HMRC's case rests on three points: closing the lag between earning and paying, cutting the volume of late payments (that one-in-five figure), and modernising the system so tax is collected more like PAYE already is for employees. It sits alongside Making Tax Digital for Income Tax, which changes how self-employed people and landlords report, and the related question of MTD and payments on account.
What is the CIOT warning about?
The Chartered Institute of Taxation (CIOT) has flagged real risks. Ruth Sadlier, CIOT Technical Officer, warned in early August 2026 that the approach could add a new layer of complexity, particularly for people whose income changes during the year.
- Individuals updating their Income Tax Self Assessment estimates, or seeing their PAYE income change, could be moved in and out of different payment systems, causing confusion and sizeable under- or over-payments.
- Those with seasonal businesses, or income weighted to the end of the tax year, could end up paying tax before they have actually received the income, creating cash-flow problems.
In short, coding out tax works cleanly for stable, predictable income. Variable and lumpy income is where it gets messy, and that describes a lot of self-employed people.
Does anything change for my 2026-27 or 2027-28 tax?
No. This is a consultation with an earliest start of April 2029. For now:
- Your online return and balancing payment are due by midnight on 31 January.
- Payments on account, if due, remain due 31 January and 31 July, each normally 50% of the previous year's bill.
- The way you pay your Self Assessment tax bill is unchanged.
If a bill is a stretch right now, that is a separate issue from the reform: HMRC's Time to Pay arrangements can spread current liabilities. Do not change what you pay in 2026 or 2027 on the strength of a 2029 proposal.
What should you do now?
Practically, three things. Keep meeting your existing 31 January and 31 July deadlines. If you are self-employed, model your likely bill early using our self-employed tax calculator so no payment on account catches you out. And if your income is seasonal or growing fast, start thinking now about how in-year collection could affect your cash flow, because those are the profiles the reform would hit hardest. For tailored planning, our Self Assessment service covers exactly this.
Frequently asked questions
Is the Self Assessment payment reform now law?
No. It is a consultation that ran from 23 June to 4 August 2026, with a summary of responses expected in autumn 2026. Any changes would take effect no earlier than April 2029, and the detail is not finalised.
Do I still have to make payments on account on 31 January and 31 July?
Yes. Nothing has changed. Payments on account, if due, remain payable on 31 January and 31 July, each normally 50% of the previous year's tax bill, alongside your balancing payment on 31 January.
Who would pay Self Assessment tax through their tax code?
Under the proposal, Self Assessment taxpayers who also have PAYE income from employment or a pension, and who have enough PAYE income to do so, would pay towards their bill through their tax code from April 2029. Around 2.1 million people are estimated to fit this group.
Why is the CIOT concerned?
It warns the change could add complexity for people whose income changes during the year, moving them between payment systems and causing under- or over-payments, and that those with seasonal or year-end-weighted income could pay tax before they receive it, creating cash-flow strain.
Sources
- HMRC: Timely payments in Income Tax Self Assessment factsheet
- CIOT: Timely payments in Income Tax Self Assessment
- gov.uk: Understand your Self Assessment bill, payments on account
- gov.uk: Self Assessment tax returns, deadlines
- gov.uk: Tax Update 2026, simplification, modernisation and fairness
Worried about how in-year tax collection could affect your cash flow? Book a free call with Zmartly and we'll help you plan ahead while keeping your current deadlines on track.
