Self Assessment payments on account to go in-year, PAYE optional

If you make Self Assessment payments on account, your tax will be collected during the tax year from April 2029, by default through automated payments such as Direct Debit. That is the outcome of the government's Timely Payments consultation, published on 28 October 2026, the day of Budget 2026. It drops the plan to require collection through PAYE (Pay As You Earn, the system that takes tax from a salary).

What has the government decided on Self Assessment payments?

At Budget 2025, the government said Income Tax Self Assessment (ITSA) taxpayers with sufficient PAYE income would pay towards their forecast bill through PAYE from April 2029. The summary of responses (GOV.UK, 28 October 2026) puts approximately 2.1 million people in scope of that announcement.

The consultation ran from 23 June to 4 August 2026 and drew 3,630 responses (summary of responses, 28 October 2026). The same document says tax can currently be paid up to 22 months after the income is earned. In its words, "the majority of respondents did not support mandatory collection of ITSA payments through PAYE." The main worries were cashflow for people with irregular income, complexity, and employers working out that a staff member had other income.

So the government changed course. "The government will therefore make automated in-year payments (such as through Direct Debit) the default," the summary says, with "the option for eligible taxpayers to opt-in to payments through PAYE."

And it widened the change at the same time. The same document says automated in-year payments "will also be extended to the wider ITSA population who are liable to make Payments on Account, to create a level playing field." The Budget 2026 document (HM Treasury, 28 October 2026) confirms the April 2029 start. From then, "taxpayers who already make Payments on Account will make smaller, more regular contributions towards their tax bill throughout the year".

Which landlords does the change apply to?

Around 12 million people file through ITSA, and approximately 7 million of them also have PAYE income (summary of responses, 28 October 2026).

Payments on Account are advance instalments towards the current year's bill, worked out from last year's return. You make them if your ITSA liability is over £1,000 and less than 80% of it was already deducted at source (summary of responses). Today they fall due by 31 January and 31 July, according to the June 2026 consultation document. Any remainder is settled by a balancing payment (the top-up once your return is filed) on the following 31 January.

The consultation document says around 70% of Self Assessment filers do not make Payments on Account. They "either make a single payment in January following the relevant tax year or have no ITSA tax liability to pay". The Budget 2026 wording covers taxpayers "who already make Payments on Account". The consultation asked whether the £1,000 threshold should change, and the summary of responses does not say what the government will do with it.

The summary describes the reform as modernising "the UK self-assessment system" and sets out no separate payment rules for Scotland, Wales or Northern Ireland. If you run your lettings as a business, our business and systems guides for property investors cover the admin side of a growing portfolio.

What could in-year payments look like in pounds?

The consultation document gives a worked example, using a hypothetical self-employed plumber called David. His liability for 2026 to 2027 is £3,400, so he pays two Payments on Account of £1,700 each, on 31 January 2028 and 31 July 2028.

His actual 2027 to 2028 liability is £3,900, leaving a £500 balancing payment. On 31 January 2029 he pays £2,450: that £500 plus a first Payment on Account of £1,950 towards 2028 to 2029.

Then comes the transition year in the example, which the June document set out "if changes were to be made". The second £1,950 instalment falls due in July 2029, alongside in-year payments of £3,900 towards 2029 to 2030. By my sum, that is £5,850 across two tax years' bills, before any balancing payment.

Spread over 12 monthly payments, the £3,900 would be £325 a month; over four quarterly payments, £975 each. Treat those as my illustration only, because the government has not yet set the frequency. The consultation stresses that "the only change is to the timing of payment", not the amount of tax.

For a landlord, the question is whether your rent covers those instalments in the months they fall. If your margins are thin, our free rental stress test calculator shows how much headroom your rent leaves over your mortgage. Speak to your accountant before you change anything.

What is still to be set out?

Plenty. The summary of responses lists five areas where the government "will set out further detail next year". They are the frequency and timing of in-year payments, safeguards for taxpayers in financial difficulty, and compliance including penalties and interest. The other two are communications and support, and how the transition will work.

On the transition, respondents' most prominent concern was cashflow pressure from liabilities for two tax years overlapping (summary of responses). Suggestions included spreading liabilities over a longer period, with views on its length ranging from two years to several. The government's answer is that moving to the new arrangements from April 2029 "will be the most straightforward approach".

To help, HMRC is building web and app tools to estimate your liability, make voluntary payments and track them, available in 2028 (summary of responses). Respondents had "mixed views" on using Making Tax Digital (MTD, the quarterly digital reporting regime for income tax) to update forecasts. The government response does not commit to linking the two.

The money matters to the Treasury too. The Budget 2026 document's table of measures scores more timely payment at +£1,355 million in 2029-30, rising to +£1,815 million in 2031-32. Our free property calculators can help you stress the rest of your numbers in the meantime.

Separately, Budget 2026 set property income tax rates of 24%, 44% and 49% from 6 April 2027 in England, Wales and Northern Ireland (HM Treasury, 28 October 2026). Our free property investor resources are a starting point for planning around both changes.

Key takeaways

• From April 2029, Self Assessment taxpayers liable to Payments on Account move to automated in-year payments, such as Direct Debit, by default (GOV.UK, 28 October 2026).

• The Budget 2025 plan to make about 2.1 million people with sufficient PAYE income pay through PAYE is now an opt-in choice.

• Payments on Account currently apply where the liability is over £1,000 and less than 80% was deducted at source.

• Payment frequency, safeguards, penalties and the transition will be set out next year, and HMRC's estimating tools arrive in 2028.

• You may wish to speak to your accountant about how monthly or quarterly instalments would sit against your rental income.