A significant, but largely overlooked, Budget 2025 measure will change how Income Tax is collected. From April 2029, taxpayers with PAYE income will see a larger portion of their Self Assessment tax collected in-year through PAYE, spreading payments throughout the year rather than in large lump sums. This major reform will affect millions of taxpayers.
In effect, the government is shortening payment timelines and moving further toward real-time tax collection.
The specifics
From April 2029, Self Assessment taxpayers with a PAYE income source will have more of their liability collected during the year through PAYE. This change is expected to raise:
- £85m in 2028-29
- £605m in 2029-30
- £235m in 2030-31
The spike in 2029-30 results from an overlap: taxpayers will still be making payments on account for the previous year while in-year PAYE collection for the current year begins. This could place additional pressure on cash flow during the transition. Careful planning and budgeting will be essential to ensure sufficient funds are available for both in-year PAYE adjustments and any remaining Self Assessment payments. Over the longer term, spreading payments throughout the year should help reduce the risk of a large end-of-year tax bill.
The government will publish a consultation in early 2026 on how this reform will be delivered. That consultation will also explore timelier payment options for taxpayers whose income is solely within Self Assessment.
How M+A Partners can help
As Income Tax moves toward in-year collection, it is crucial to stay on top of your liabilities. Our experienced Tax Team can help you understand how the new PAYE rules may affect your payments, ensure your Self Assessment submissions are accurate and plan ahead for overlapping payments. Our team will guide you through the changes and help you stay compliant and prepared.
