New proposals recommend regular ITSA tax payments from 2029

New proposals recommend regular ITSA tax payments from 2029


A new consultation paper from the Government has set out how Income Tax Self Assessment (ITSA) payments could move to a more regular, in-year footing.

The new proposals, which formed part of the latest Tax Update, follow on from recommendations made in the Autumn Budget 2025. 


How could tax payments change in future? 


From April 2029, taxpayers with sufficient PAYE income will be required to make ITSA payments through PAYE each payday, based on their forecasted ITSA liability.

The forecast will be based on the taxpayer's last filed tax return and divided into equal payments across the year. 


Taxpayers will be able to update their forecast using more recent information, with payments adjusting accordingly.

It is proposed that the amount collected through PAYE in any pay period would be capped at 50 per cent of PAYE income. 

The consultation asks whether this threshold needs more flexibility for certain groups.


Impact on employers


Employers collect PAYE, so this change will create extra work. Tax codes are likely to change more frequently and some employers currently paying PAYE quarterly may need to switch to monthly payments as amounts collected increase. 

Views are being sought on what additional support employers might need through the transition.


Reform of payments on account


From April 2029, the Government may increase the frequency of Payments on Account (POAs) for those subject to Self Assessment outside of PAYE, potentially making them quarterly or monthly.

This would bring them forward so they fall within the same tax year as the income they relate to and will, most likely, rely on information provided via Making Tax Digital. 

These direct ITSA POAs would be forecast from past Self Assessment returns, with taxpayers able to update their forecast if needed. 

Actual liability would still be reported and balancing payments or repayments settled when the next return is completed. 

Taxpayers will keep the ability to contact HMRC if their POA no longer reflects their liability and a wider use of payment plans is being considered.


Why is the change happening?


Under the current system, there can be a delay of up to 22 months between someone earning income and paying tax on it. 

This can lead to unexpectedly high tax bills, sometimes referred to as bill shock, for some taxpayers. 

Around one in five ITSA tax bills are currently paid late. Spreading payments more evenly across the year, closer to when the income is earned, should make budgeting easier and reduce the risk of falling into tax debt.

The reforms will not affect how much tax is owed, only when it is paid.


What to look out for


There will also be a transition year, where payments for the previous tax year continue alongside the new in-year payments.

The consultation closes on 4 August 2026, with a Government response expected in autumn 2026 and legislation to follow ahead of the April 2029 start date.


If you would like advice on the proposed changes to ITSA payments, please get in touch with our team.

Invoice financing - Liberating cash tied up in late payments

By Charlie Flockhart • August 21, 2026
SMEs in the UK have struggled with late payments for years and cash tied up in unpaid invoices can put pressure on your business’s ability to operate effectively. Invoice financing can release funds locked up in late payments, giving a business an instant cash flow injection until the outstanding balance is settled. Consistent late payments can significantly stunt business growth, especially for SMEs with thinner cash reserves. What is invoice financing? Invoice financing works by a lender using unpaid invoices as collateral for funding. Lenders can advance up to 95 per cent of an invoice’s total value almost immediately, instead of waiting 30 days, 60 days or longer for payment from a customer. The remaining balance of an invoice’s value can be settled once the customer has paid and lenders will deduct a service charge and discount depending on the value of the loan. This means SMEs can instantly access capital that would be otherwise trapped, allowing them to offer more payment flexibility to clients. When is it worth it? This method of securing working capital is a great fit for firms that experience long waits for payment, either due to contract terms or overdue invoices. Invoice financing helps keep cash flow healthy to cover running costs, begin new projects and reinvest money into business growth. However, invoice financing is not a silver bullet. Businesses with narrow margins might not be able to use these services, as the fee structures can sometimes dent profitability. Likewise, businesses with a small volume of invoices that are high value might face disproportionately high costs for advancing payments. Also, if a business typically receives quick payment turnaround, a short-term overdraft loan may be more appropriate. Seeking advice Whether invoice financing is the right choice for you will depend on a number of factors, so getting a second opinion from a specialist can help you decide. Our accountants can assess your position and advise which options will work best, helping you overcome the frustration of late payments. Get in touch to find out more about invoice financing.

I have received a HMRC enquiry letter – What do I do now?

By Charlie Flockhart • August 21, 2026
HMRC enquiry letters are sent to individuals to notify them that HMRC has chosen to formally investigate their tax affairs. While some enquiries are carried out randomly, the majority are selected based on a risk assessment of a business. These checks should not be seen as accusatory, as they are often a routine procedure to make sure your business is compliant and the correct amount of tax is being paid. If you’ve received a letter, you need to know what to do. Why are there more enquiries? It is no surprise enquiries are on the rise when the UK’s estimated tax gap for 2024 to 2025 sits at £59.2 billion, up £6.4 billion on the previous year, according to HMRC. The largest component of the tax gap by customer group is small businesses, accounting for 62 per cent of lost liabilities. HMRC is feeling the fiscal squeeze and small businesses have been identified as a key target for closing the tax gap. How should I respond? After receiving an enquiry letter, you have 30 days to respond from the date printed. Your first step should be to speak with your accountant and gather all the relevant documents and information that has been requested by HMRC, making sure each requirement is reasonable. Next, the information should be reviewed to understand the context and implications of the information HMRC has asked for. If you believe there is anything that might need to be disclosed, it is important that a disclosure is made as early as possible. HMRC reviews the timing of any disclosure when deciding on penalties. Finally, when you are ready, respond to HMRC with the information alongside any explanations or clarifications. If the deadline is not realistic, it is important to request an extension before a response becomes overdue. How can an accountant help? Accountants can help distinguish between information that is ‘reasonably required’ by HMRC and that which goes beyond their scope. It is not uncommon for HMRC to ask for a response that is broader than what is required, but an accountant can explain where and when disclosure is needed. Throughout the process, accountants can oversee communication with HMRC to minimise inconsistencies and handle extension requests properly. HMRC enquiries can feel overwhelming. If you have received a letter, speak with our team at the earliest opportunity.

Companies House issues warning over scammers

By Charlie Flockhart • August 21, 2026
Companies House has issued warnings to directors after a rise in scam emails following the organisation's new identity verification processes. The scams are designed to create urgency and encourage directors to hand over personal information or click malicious links. While the changes are intended to help tackle economic crime and improve trust in the UK company register, criminals are exploiting uncertainty around the new rules to target businesses. What is the scam? The scam typically starts with an email claiming that a company director, Person with Significant Control (PSC) or other company officer must complete an identity verification process. The message often contains urgent language and may warn recipients that failing to act could result in penalties, restrictions or compliance issues. The aim is to pressure recipients into responding before they have time to verify whether the communication is genuine. Many of the fraudulent emails closely resemble legitimate messages from Companies House. In some cases, scammers have copied wording directly from official correspondence, making the emails appear authentic at first glance. However, recipients are often directed to fake websites that have been created to collect personal information, login credentials or financial details. Companies House has made it clear that these requests should be treated with suspicion. What do fraudsters want my information for? If criminals successfully obtain personal or company information, they may use it for a range of fraudulent purposes. Information such as names, dates of birth, addresses and contact details can be used to commit identity theft or build a detailed profile of an individual director. This information may then be used to impersonate them in future scams or financial crimes. Fraudsters could also attempt to gain access to company accounts, submit unauthorised filings or impersonate directors when communicating with suppliers, customers or financial institutions. If authentication codes or account credentials are compromised, criminals may be able to access sensitive information or make changes to company records. In many cases, stolen data does not remain with a single criminal group. Personal and business information can be sold to other fraudsters and used in future phishing campaigns, banking scams, invoice fraud schemes or tax-related scams. Once a director has been identified as a potential target, they may become the focus of increasingly sophisticated attacks. What are the signs of a scam to look out for? Business owners need to look out for signs of scams to ensure they do not fall victim to them. Signs to look out for include: Emails sent from non-genuine email addresses that do not end in Gov.uk – all emails from Companies House will end in official government domains. Messages that create a sense of urgency and demand immediate action. Requests for information that do not have a clear reason. Links to websites that do not use an official Government web address. Emails with suspicious attachments, unusual wording or spelling mistakes. If you have received an email from Companies House that you believe is a scam, report it immediately to: phishing@companieshouse.gov.uk and delete the email from all mailboxes. Full guidance on scams can be found here .