ITSA tax payments could be changing from 2029 under new proposal

Following recommendations in the Autumn Budget 2025, ITSA payments may move to a more regular, in-year basis, making it important for those affected to understand the potential impact on Self-Assessment tax returns.

From April 2029, taxpayers with sufficient PAYE income may be able to make ITSA payments through their salary, based on their forecast tax liability and spread evenly across the year.

Payments will need adjusting if forecasts are updated and deductions capped at 50 per cent of PAYE income per pay period.

Under the current system, there can be up to 22 months between earning income and paying the associated tax, potentially leaving taxpayers with large and unexpected bills.

Moving towards more regular payments could make liabilities easier to manage by bringing tax payments closer to when your income is earned.

The overall amount of tax due would not change, only when it is paid.

How will the proposals affect employers?

While taxpayers will see the biggest changes, if you are an employer, you may also need to adapt your practices.

More frequent tax code changes are likely too and while some of you are operating quarterly, PAYE may need to move to monthly payments as the amounts collected increase.

The full impact remains part of the Government’s consultation for now.

Payments on Account could also change

From April 2029, Payments on Account (POAs) could move from twice yearly to quarterly or monthly payments, bringing tax payments closer to when income is earned and potentially aligning them with Making Tax Digital (MTD).

Payments would also be based on previous Self-Assessment returns and could be adjusted if circumstances change.

As a taxpayer, you would still report your actual liability through your tax return, with any balance or repayment settled afterwards.

What happens next?

A transition year is expected, during which you may need to make payments relating to the previous tax year alongside the new in-year payments.

Legislation is expected ahead of the proposed introduction of the changes in April 2029 so please subscribe to our newswire to stay up to date.

Our team can help you understand how the proposed ITSA changes could affect you and prepare for the new payment arrangements. Please get in touch to find out more.