The government has published its response to the consultation on 'Timely payments in Income Tax Self Assessment (ITSA)'. Rather than requiring taxpayers to pay their ITSA liabilities through PAYE, automated in-year payments, such as by Direct Debit, will be the default. Taxpayers with sufficient PAYE income can opt for PAYE collection, and the changes will begin from April 2029.
In Budget 2025, the government announced that from April 2029, Income Tax Self Assessment (ITSA) taxpayers with sufficient PAYE income (about 2.1 million people) would make in-year payments towards their forecast liabilities through PAYE each pay period.
The aim is to bring payment closer to when income is earned. Currently, tax can be paid up to 22 months after it has been earned, which can lead to large bills and tax debts, and many taxpayers find it hard to budget for large lump-sum payments. Around 12 million people file an ITSA return, and around seven million of them also have PAYE income.
The consultation ran from 23 June to 4 August 2026. It asked about collecting ITSA payments through PAYE, and about reforming Payments On Account (POAs) for the wider ITSA population.
Responses
The consultation received 3,630 written responses, mainly from self-employed individuals and small businesses, alongside accountants, payroll operators and representative bodies.
- Most respondents opposed mandatory collection through PAYE. Some saw benefits for those with regular income or who struggle to budget, but most wanted choice rather than compulsion.
- Cash flow was the main concern, particularly for those with irregular income, as forecasts based on the last return may not reflect current earnings. Respondents wanted a quick and easy way to update forecasts.
- Others raised the complexity of frequent tax code changes and confidentiality, with some worried that employers could infer other income.
- Employers and payroll operators warned of extra costs, software changes and taxpayer queries they cannot answer or resolve.
- Direct payments to HMRC, whether automated or manual, were seen as more transparent and less burdensome than PAYE collection. Those open to reform generally preferred quarterly rather than monthly payments.
- Most respondents supported keeping or raising the £1,000 POAs threshold.
- Many called for a carefully managed transition, voluntary pre-payments, online tools and calculators, and early guidance and helplines for agents.
Next steps
The government says it has listened to the concerns, particularly about mandating payments through PAYE. From April 2029:
- Automated in-year payments, such as by Direct Debit, will be the default approach, rather than mandatory collection through PAYE.
- Taxpayers with sufficient PAYE income can opt to pay their ITSA liabilities through PAYE.
- Automated in-year payments will also extend to the wider ITSA population liable to make POAs, creating a level playing field.
From 2028, HMRC will introduce new web and app tools to help taxpayers estimate their liabilities, track payments against their forecast liability and make voluntary pre-payments ahead of the changes.
The government will keep working with stakeholders and will set out further detail next year on:
- The frequency and timing of in-year payments.
- The safeguards and flexibilities needed for taxpayers facing financial difficulty.
- The approach to compliance, including penalties and interest.
- Communications and support for taxpayers.
- How the transition to the new arrangements will work.
HMRC say they will provide further information and support ahead of implementation.
Useful guides on this topic
Collecting tax debts via PAYE
When can HMRC collect tax debts via PAYE? What are the graduated limits?
Payments On Account (POAs): Self Assessment
When are Payments On Account (POAs) made under Self Assessment? How are POAs calculated? What are the consequences of not making a payment on time? Can POAs be reduced? What happens if POAs are reduced too far? What changes to POAs have been proposed?
External links
Consultation outcome: Timely Payments in Income Tax Self Assessment (ITSA) - Summary of responses