Budget 2025: Overhaul of Self-Assessment & Year-End Payments

Away from the main announcements, hidden in the small print of Rachel Reeves’ Budget 2025 documents are plans to make significant changes to the way self-assessment tax payments will be collected.

Under the new proposals, HMRC aims to adjust the timing of tax payments. These changes are intended to make the system more efficient, and ensure that taxpayers can meet their tax liabilities more easily.

Another key objective behind these reforms is to help reduce the tax gap. This is the difference between the tax that should be paid and what is actually collected. By making the move to potentially make tax payments earlier and more frequently, HMRC hopes reduce the amount of uncollected tax.

What are the Proposals?

From April 2029, the government will require income tax self-assessment taxpayers with PAYE income to pay more of their self-assessment liabilities in year, via PAYE deductions. At the same time, HMRC is exploring ways to introduce ‘timelier’ tax payments for those with only self-assessment income. In effect, this move shortens payment times, enabling HMRC to collect money faster and reduce delays in tax receipts.

HMRC recognises that these changes will have a significant impact on individuals and businesses. To ensure the reforms are practical and effective, a formal consultation will be launched in the new year.

Disclaimer - All information in this post was correct at time of writing.