Prepare Now for Monthly Self Assessment Payments and Double Tax Payments in 2029

Key takeaway: HMRC’s June 2026 consultation proposes a fundamental shift to more frequent, in‑year Income Tax Self Assessment (ITSA) payments from April 2029, replacing the current January/July payments on account (POAs).  The change aims to reduce long delays between earning income and paying tax, but creates a complex transition year where taxpayers may temporarily pay both old‑system POAs and new in‑year instalments.

Overview: Why HMRC is proposing change

• Under current rules, ITSA tax can be paid up to 22 months after income is earned.

• Around 1 in 5 ITSA bills are paid late, often due to large, infrequent payments.

• From April 2029, HMRC wants tax to be paid closer to real time, smoothing cashflow and reducing debt risk.

Two taxpayer groups

1.  Taxpayers with PAYE income + Self Assessment income

HMRC proposes:

• Collecting monthly PAYE deductions towards the taxpayer’s forecast ITSA liability.

• Forecast based on the previous year’s return, with a balancing payment after filing.

• Applies where PAYE income is sufficient to collect instalments.

2.  Taxpayers with only Self Assessment income

HMRC is consulting on:

• Monthly or quarterly direct payments on account, replacing the current two POAs.

• Payments based on prior‑year liability, adjusted when the tax return is filed.

The Transition Year (2029/30)

This is the most complex part.

In 2029/30, taxpayers may need to pay:

1. Final POA under the old system (for 2028/29),

2. New in‑year instalments (for 2029/30),

3. Balancing payment for 2028/29 in January 2030.

This creates a temporary double‑up of payments.

Example: Bob the Brickie

Bob is self‑employed with profits of £35,000.

Current system (2027/28 → 2028/29)

• POAs based on prior year: £2,700 in Jan 2028 + £2,700 in July 2028.

• Actual liability £6,900 → balancing payment £1,500 in Jan 2029.

• Plus first POA for 2028/29: £3,450.

Transition year (2029/30)

Bob pays:

• Second POA for 2028/29: £3,450 (July 2029).

• New estimated POAs for 2029/30: £6,900 spread monthly or quarterly.

• Balancing payment for 2028/29: £500 in Jan 2030.

From April 2030 onwards

• Monthly/quarterly instalments based on updated estimate (£7,400).

• Balancing payment (£600) in Jan 2031.

Key complexities HMRC highlights

• Transition-year cashflow spike (temporary double payments).

• Fluctuating income (both PAYE and self‑employment).

• Safeguards needed to prevent over‑collection via PAYE.

• Impact on employers/pension providers administering PAYE deductions.

• New entrants to Self Assessment needing a workable first‑year model.

• Agent and software implications (forecasting, adjustments, client communication).

Payment Frequency Options Being Considered

For PAYE + SA taxpayers

• Monthly via PAYE (default).

For SA‑only taxpayers

• Monthly direct payments, or

• Quarterly direct payments (April, July, October, January).

What stays the same

• Total tax paid does not increase — only the timing changes.

• Balancing payments still due after filing.

• Forecasts still based on prior‑year liability unless updated.

Implications for You

• Consider cashflow planning for the 2029/30 overlap.

• PAYE coding changes may require liaison with your employer.

• You may need to consider monthly budgeting tools.

• Talk to us about managing in‑year estimates and corrections.

• Check your payroll software providers will support real‑time forecasting and instalment tracking.

Consultation details

• Opened: 23 June 2026

• Closes: 4 August 2026 at 11:59pm

• Response publication: Autumn 2026

• Implementation: April 2029 (Finance Bill)

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