From 2029, paying HMRC changes: Direct Debits and more regular payments
VAT and PAYE will need a Direct Debit in place, Self Assessment taxpayers will pay more during the year, and HMRC gains a new power to collect debts from bank accounts.
Several Budget measures change how tax is paid, rather than how much. They start in 2029, but each one changes a business’s cash flow, so they belong in the plan now.
The timetable
- 1 Apr 2029Direct Debit instruction required for VAT return liabilities
- 6 Apr 2029Direct Debit instruction required for PAYE liabilities
- Apr 2029More regular in-year payments for Self Assessment taxpayers who pay on account
- Jul 2029HMRC can recover lower value debts in instalments from the bank accounts of those who repeatedly fail to pay
Direct Debits for VAT and PAYE
Businesses will still be able to pay by other methods before a cut-off date. The Direct Debit will then collect any balance still unpaid, so the bank account will need to hold enough to cover it.
More timely Self Assessment payments
Today, people who make payments on account pay half of last year’s bill on 31 January and half on 31 July, with any balance the following January. From April 2029, those taxpayers will be required to make more regular in-year payments. The detail is still to come; the Treasury expects it to bring in over £1.3 billion in its first year.
Getting ready
- Keep a separate tax account and move money into it each month.
- Forecast VAT and PAYE alongside wages and rent in your cash plan.
- If you pay on account, think about monthly saving now rather than two large payments.
This insight is general information, not advice for your circumstances. Talk to us before acting on it.