ATT warns taxpayers could face 'double’ tax payment confusion under proposed Self Assessment reforms
The Association of Taxation Technicians (ATT) has warned that proposals to accelerate Income Tax Self Assessment (ITSA) payments risk some taxpayers paying two years’ worth of tax payments at the same time.
Responding1 to HMRC's consultation on timely payments for ITSA, the ATT says the proposals should be reconsidered, warning that they would make the tax system more complicated for millions of taxpayers when relatively few struggle to pay their tax liabilities on time.
Under the proposals, taxpayers with both Self Assessment and PAYE income would begin paying estimated Self Assessment liabilities monthly through PAYE from April 2029. However, in the first year of the new rules being rolled out, many would still be required to make payments on account for the previous tax year under the existing rules.
The ATT says this could mean taxpayers paying the equivalent of two years' estimated tax within broadly the same fourteen-month period.
Jon Stride, chair of the ATT’s Technical Steering Group, said:
"The proposed ‘transition year’ is likely to confuse many taxpayers and could create significant cashflow difficulties. Someone could find themselves paying the equivalent of two years’ worth of tax between 31 January 2029 and 31 March 2030, despite there being no increase in the amount of tax they ultimately owe.
"Bringing tax payments closer to when income is earned may sound straightforward, but these proposals would make an already complex system even harder to understand. Many taxpayers will struggle to grasp why their PAYE deductions have increased, while also continuing to make payments on account under the existing rules during the transition year.
"Income for the self-employed and landlords commonly fluctuates significantly from year to year. HMRC expect taxpayers to update their forecast liabilities to reflect such changes. Expecting taxpayers to continually review and accurately update estimates based on historic information is unrealistic and increases the risk of mistakes. There will also be additional burden under these measures on the PAYE system, with more figures for employees to check in their tax codes, and greater demands on employers to update tax codes and deal with employee queries when take home pay changes.”
Notes for editors:
- ATT consultation response: Timely payments for Self-Assessment.