This post was originally published on this site.
The government is making tax changes for those who have self-employment income as well as income from pay as you earn (PAYE). These are expected to kick in from April 2029.
Said changes are being introduced because one in five Self Assessment bills is paid late, with potential fees and penalties lumped on top, according to the government.
Tax gap figures released in June 2026 show a 6.4% gap between the tax that was supposed to be collected and the tax actually collected for the 2024/25 tax year. That amounts to £59.2 billion in unpaid tax. Small businesses represent the largest proportion of that tax gap (62%) and around half the gap is for corporation tax.
What’s more, 1.1 million Payments on Account were missed in 2025, with the person paying the tax falling into debt in 75% of the cases. This resulted in penalties and interest.
Here’s a look at what the government is planning and how to get involved in the consultation.
What will change?
Under the new system, individual taxpayers who have both Self Assessment and PAYE will need to contribute to their Self Assessment payments through their regular PAYE payments.
The amount paid will stay the same, but the frequency of payments will increase. The idea is to space out tax payments so that the self-employed don’t pay out big chunks at a time, affecting their cashflow.
Check out these headline amendments.
HMRC will use your most recent tax return to estimate your payments.
Where it’s possible, the taxman will update your tax code. This will decide how much of your Self Assessment income is taken through PAYE income alongside your existing tax on your employment or pension.
If the self-employed know that their tax is going to be significantly higher or lower than usual, they can tell HMRC using an online form.
Taxpayers will file their tax return by January 31 as per, while paying any other remaining tax.
There’s the possibility of increasing frequency of payments on account. A balancing payment may be introduced at the end of the following January if tax is outstanding after the first two payments.
How do I contribute to the government consultation?
The government has opened a consultation (until August 4) into how these changes will be implemented. The consultation will ask about:
- How and when to set payments
- How to protect taxpayers
- How the transition should go
- Additional safeguards to help with the transition
Use the online form to respond. Send email enquiries or responses to [email protected].
Send written responses to:
Helen Derbyshire
Timely Payment Team
HM Revenue and Customs
Trinity Bridge House
2 Dearmans Place
4th Floor
Manchester
M3 5BS
More responsibility, same level of resource
Concerns are growing around increased admin with very little benefit to businesses.
Steven Mather, lawyer and director at Steven Mather Solicitor, “If HMRC’s forecasts are wrong, small businesses will be the ones chasing refunds or scrambling to top up, and that’s more admin, not less.
“The promise of ‘support and guidance’ needs to be real, because owner-managers don’t have a finance department to absorb the friction – and getting a response from HMRC right now feels close to impossible.”
Matthew Knight, chief freelance officer at Freelancing.Support, said: “We desperately need simplification of taxation, along with better education and accessible and affordable tax advice for small businesses and freelancers, to help the ‘backbone of Britain’ bear any additional burden.”
Helen Llewellyn, founder at Elemental Tribe, said the changes don’t reflect the fluctuations of self-employed income: “How will payroll and tax codes cope with the potential fluctuations or seasonality of self-employment? They won’t. It will be another fine mess they got themselves into.”
Thank you to news.page for the above quotes.
Read more
Making Tax Digital thresholds and timelines for 2026-2028 – Confused about upcoming Making Tax Digital changes? Check the thresholds and timelines to ensure you’re on the right track
Making Tax Digital (MTD) – HRMC requirements and the best compatible software providers – After the rollout of Making Tax Digital (MTD) for VAT, MTD for Income Tax is being phased in from April 2026
