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HMRC's biggest Self Assessment shake-up in decades could change how millions pay tax

The Government is consulting on plans to overhaul Self Assessment by replacing twice-yearly Payments on Account with monthly or quarterly instalments for millions of taxpayers, aiming to "modernise the tax system" by ensuring Income Tax is "paid closer to real time."
Officials report "around one-in-five ITSA tax bills are paid late," while taxpayers currently face "a delay of up to 22 months from when the initial taxable activity takes place and when the relevant tax is paid."
The Government states "these proposed reforms will not increase the amount of tax due; instead, they bring the timing forward." Payments would be "forecasted, based on past Self Assessment returns" with taxpayers able to update forecasts if income changes.
Despite HMRC assurances, freelancers and small business owners worry about cash flow pressures from paying throughout the year. The consultation acknowledges "an adjustment period" as taxpayers transition to the new payment system.
The consultation closes on August 4, with The Government expected to publish its response later this year. Officials say the reforms aim to "support taxpayers to manage their ITSA liabilities more effectively, reducing tax debt and improving compliance.

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