Understanding the Proposed Reforms
The UK government is consulting on reforms under Timely Payments in Income Tax Self Assessment (ITSA). The aim is to shift more of your tax payments to in-year payments, especially for those who also have PAYE income. These reforms do not increase total tax, but change when you pay. (gov.uk)
Key details from the consultation:
- Payments will be forecasted using past SA returns; you’ll update forecasts as circumstances change. (gov.uk)
- A balancing payment (or repayment) will occur when completing the SA return, as under current rules. (gov.uk)
- Safeguards for taxpayers with seasonal or irregular income will be considered. (gov.uk)
Who’s Affected and When
- Those with PAYE income who also file SA returns are first in scope. Pure SA filers (self-employed or landlords without PAYE) may see changes later. (gov.uk)
- These reforms are planned to be introduced from April 2029. (gov.uk)
Practical Implications & Planning Tips
Here’s how these changes could affect taxpayers and what actions you should take now:
| Scenario | Current System | Under Reforms | What You Can Do Now |
|---|---|---|---|
| PAYE + Self-Assessment filer | Pays via SA due dates and/or payments on account | More SA tax collected during the year via PAYE or adjusted PAYE codes | Review PAYE tax code regularly; ensure income forecasts are accurate |
| Irregular or seasonal income | Payments on account help approximate annual liability | Forecasting will assume trend income; under-earning may cause cashflow issues | Set up a buffer fund; update forecasts as soon as income changes |
| Landlords or freelance purely SA | All payments after year-end | Reforms may extend to them later; timing may shift | Track all income and expenses in detail; consider early tax software or agent support |
Tips for Agents and Software Providers
- For agents: begin advising clients on forecasting income and tracking income sources more precisely.
- For software: prepare for tools that allow forecasting and real-time updating, integrate alerts for changing projections.
Common Questions Answered
Will I pay more tax? No—your overall liability stays the same; timing just changes.
What happens if my forecast is wrong? There will be a reconciliation via the balancing payment when completing SA.
Is this mandatory from April 2029? For those with PAYE + SA income, yes; for others, details are still under discussion.
Actionable Steps Before April 2029
- Ensure your records from past SA returns are clear and complete.
- Monitor your payroll tax code annually—if SA income increases, tax code may adjust.
- If you’re self-employed or have SA-only income, consider budgeting for the current due dates but stay alert for future timeline shifts.
- Consult a professional if you anticipate large variances year to year in income.
These reforms aim for a fairer system where tax is paid closer to when income is earned, reducing surprises at the end of the year. With advance preparation, taxpayers can reduce the risk of cashflow strain and ensure compliance.