Tax Planning
Tax Planning for UK Individuals: Preparing for Changes in Self-Assessment Payments (ITSA)
UK taxpayers with Self-Assessment liabilities should prepare for reforms introducing more timely payments in-year via PAYE, with major implications from April 2029.
By NomadicTax Research Team • 5-8 min read • July 28, 2026
## Overview of the proposed change to Income Tax Self Assessment (ITSA)
In the UK’s **2026 tax update** published 23 June 2026, the government proposed reforms aimed to shift **Self-Assessment tax payments to more regular, in-year payments via PAYE for those with 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)) The goal is to reduce the frequency of large lump-sum payments and ease cash flow burdens. Other taxpayers may see changes to the Payments on Account system. ([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 is affected & why this matters
- Taxpayers earning income through both PAYE and Self-Assessment. Those with significant non-PAYE income currently make a single large payment after the tax year ends.
- Self-Assessment users without PAYE income may still face reforms to the Payments on Account.
This is important because:
- Spread-out payments mean smaller, more predictable cash outflows.
- Avoidance of surprise large bills after April 5.
- Potential interest or penalties if new payment obligations are not met.
## Practical tax planning strategies
1. **Forecast your annual tax early**: Combine your PAYE income and expected self-employment or other income to estimate your total liability.
2. **Discuss with employer for PAYE adjustments**: If you expect extra income, asking your employer to adjust PAYE codes may help spread the burden.
3. **Keep tight cash reserves**: Prepare for earlier or phased payments starting April 2029.
4. **Engage with HMRC’s consultations**: There’s an ongoing consultation. Public submissions may influence thresholds, timing, and methods.
## Example scenario
- **Scenario**: Sarah works in a salaried role (PAYE) part-time and runs a small design business on the side. She earns £40,000 PAYE income and £15,000 through her business. Under the reform, from April 2029, Sarah may need to pay into PAYE some forecasted Self Assessment liability rather than a large payment in January.
- **Benefit**: she avoids £5,000 bill in one go and spreads payments during the year.
## Legislative update & timelines
- Draft legislation published in **Finance Bill 2026-27** on 13 July 2026 includes proposals covering this reform. ([gov.uk](https://www.gov.uk/government/collections/finance-bill-2026-27-draft-legislation-and-technical-tax-documents?utm_source=openai))
- Reforms are planned for **April 2029** for those combining PAYE and Self Assessment. ([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))
## Action points for taxpayers now
- Start tracking your non-PAYE income and expenses now so you have clear forecasts.
- Speak to advisors or use tax software to model your cash flows under the proposed regime.
- Budget for more frequent payments.
- Stay alert for the final Finance Bill wording and guidance from HMRC (expected likely in late 2026 or early 2027).
## Summary
These proposed changes aim to bring UK Self-Assessment into greater alignment with PAYE payments, reducing stress from large, end-of-year tax bills. Individuals with mixed income streams should plan ahead now to avoid last-minute surprises.