The changes form part of the Government’s efforts to bring tax payments closer to when income is earned, reduce outstanding tax debts and narrow the gap between tax owed and tax collected. While ministers believe the system will help taxpayers manage their finances, concerns remain about its impact on people whose earnings fluctuate.
HMRC To Introduce Automated Payments From April 2029
Under the existing Self Assessment system, many taxpayers make two Payments on Account each year, with a balancing payment due the following January. This means income tax can be paid up to 22 months after the income was earned.
According to HMRC’s consultation response, published on 28 October 2026, approximately 12 million people submit Income Tax Self Assessment returns, including around seven million who also receive income taxed through Pay As You Earn (PAYE).
The Government initially proposed requiring taxpayers with sufficient PAYE income to make regular deductions through their employment earnings. Around 2.1 million people were expected to fall within the scope of that proposal.
Following consultation, ministers have changed their approach. Automated payments made directly to HMRC, potentially through Direct Debit, will become the default method instead.
Taxpayers with sufficient PAYE income will still be able to choose deductions through that system if they prefer.
The arrangements will also extend to the wider Self Assessment population required to make Payments on Account, rather than being limited to people who receive both employment and self-employment income.
Payments will continue to be calculated using tax owed in the previous year, although taxpayers will be able to update their estimates online when their financial circumstances change.
The annual Self Assessment filing deadline of 31 January will remain unchanged.
According to the Birmingham Mail, the Treasury expects the reforms to raise £1.3 billion by 2029–30, with receipts forecast to reach £1.8 billion by 2031–32.
Concerns Over Irregular Earnings Shape the Government’s Approach
The policy follows a consultation held between 23 June and 4 August 2026, which attracted 3,630 responses from taxpayers, businesses, accountants and professional organisations.
According to HMRC, most respondents opposed making Self Assessment payments through PAYE compulsory, citing concerns about cash flow, administrative complexity and the difficulty of estimating future earnings.
Self-employed workers with seasonal or unpredictable income were particularly concerned about making payments based on previous tax liabilities rather than money already received.
Respondents also questioned whether additional deductions could place financial pressure on people during quieter trading periods.
Some supported more frequent payments in principle, particularly quarterly arrangements, provided taxpayers could revise their estimates and adjust payments when circumstances changed.
The Government has acknowledged these concerns and will continue consulting stakeholders on payment frequency, financial safeguards and transitional arrangements.
From 2028, HMRC intends to introduce online and app-based tools allowing taxpayers to estimate their liabilities, monitor payments and make voluntary contributions ahead of the changes.
Further details covering payment schedules, penalties, interest and support for financially vulnerable taxpayers are expected next year.
For now, the Government maintains that the reforms will give taxpayers smaller bills throughout the year while allowing time to prepare for the new arrangements.
