Tax Planning
Planning Your Income and Payments: Timely Payments in UK Self Assessment
Future reforms are proposing that Self Assessment taxpayers with PAYE income will pay more of their liability in-year through PAYE, easing burdens and smoothing cash flow. Here's how to prepare.
By NomadicTax Research Team • 5-8 min read • August 28, 2026
## What Are The Proposed Reforms?
As part of HMRC’s **Tax Update 2026** and following announcements from **Budget 2025**, the government is consulting on reforms to shift more Self Assessment liabilities **into PAYE**, especially if you also receive PAYE income. ([gov.uk](https://www.gov.uk/government/publications/summary-of-tax-update-2026-simplification-modernisation-and-fairness/tax-update-2026-simplification-modernisation-and-fairness-summary?utm_source=openai))
Currently, Self Assessment taxpayers with PAYE income often owe substantial balancing payments upon filing, plus **Payments on Account** in two instalments. The consultation seeks views on moving more payments **earlier, in-year**, to reduce surprises and tax debt. ([gov.uk](https://www.gov.uk/government/publications/summary-of-tax-update-2026-simplification-modernisation-and-fairness/tax-update-2026-simplification-modernisation-and-fairness-summary?utm_source=openai))
## Who Will Be Affected & When?
- The reforms would begin to apply for **taxpayers with both Self Assessment and PAYE income** from **April 2029**, as per current government proposals. ([gov.uk](https://www.gov.uk/government/publications/summary-of-tax-update-2026-simplification-modernisation-and-fairness/tax-update-2026-simplification-modernisation-and-fairness-summary?utm_source=openai))
- The Payments on Account system for sole Self Assessment income customers may also be revised or replaced. The consultation seeks input. ([gov.uk](https://www.gov.uk/government/publications/summary-of-tax-update-2026-simplification-modernisation-and-fairness/tax-update-2026-simplification-modernisation-and-fairness-summary?utm_source=openai))
## Why the Change?
- **Reduce large tax-debt spikes**: more regular payments means less risk of underpayment.
- **Fairer cash flow spread**: avoids daunting bills in January for those who could afford to spread cost.
- **Better alignment of payments with when income is earned**.
## Practical Planning Tips Before Changes Arrive
- Review your **income flow** across months; estimate earnings from PAYE and self-employment to forecast total tax due.
- Consider increasing your PAYE tax code in advance if you expect high unauthorised Self Assessment liability. Seek advice from HMRC or employment advisers.
- Track Payments on Account deadlines if applicable (usually 31 January and 31 July) to ensure funds are available.
- Keep updated on the consultation response release; final legislation likely through Finance Bill 2026-27.
## Example Scenario
Tom works part-time employed with PAYE and has rental income. Currently, he settles most tax post-year via Self Assessment, alongside two Payments on Account. If reforms pass:
- Some or all of his rental income tax may be collected via PAYE through revised code changes or PAYE deductions during year.
- Amount he pays in January could be significantly lower.
- He’ll need to plan monthly budgets differently—and may need advice on adjusting PAYE code sooner rather than later.
## What You Should Do Now
- Identify whether your income mix (PAYE + Self Assessment) makes you a likely candidate.
- Monitor HMRC consultation updates—responses closed in August 2026. ([gov.uk](https://www.gov.uk/government/consultations/timely-payments-in-income-tax-self-assessment/timely-payments-in-income-tax-self-assessment-itsa?utm_source=openai))
- Engage with tax advisers to structure income and liabilities where possible to reduce risk.
## Key Takeaways
- Reforms designed to **smooth cash flows** and reduce surprise tax bills.
- Earliest application is **April 2029** for those with PAYE income.
- Those with only Self Assessment income also under review.
- Use the intervening years to plan, adjust, and forecast more proactively.
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Effective planning during the transition period can reduce stress when reforms take effect, ensure you have liquidity when needed, and minimise repayment or penalty surprises.