Is Your Tax Return Being Scrapped? HMRC’s 2029 Plans Broken Down

For decades, millions of UK taxpayers have used Self Assessment. They declare income, report taxes, and settle what they owe HMRC once a year. Even people who pay tax through PAYE have often needed a tax return. Freelance income, rental earnings, or investment gains must still be disclosed.

From 2026, HMRC plans to reshape this routine. A major reform has quietly arrived. It could remove large groups from Self Assessment. It could also pull others into more frequent, real-time payments. The idea sounds simple: collect tax earlier in the year instead of waiting until January. The real-world implications are far more complicated.

This guide breaks down exactly what is changing. It covers who may no longer need a tax return after 2026. It explains who the new PAYE-based adjustments will affect. It also shows why HMRC believes this shift will make the system more efficient.

What Sparked the Debate About Tax Returns Being Scrapped

A short sentence buried in the Budget documents could dramatically change Self Assessment. The official statement says something clear. The government proposes that, from April 2029, taxpayers with PAYE income would pay more of their Self Assessment tax in-year, collected through their PAYE tax code. This is a consultation proposal, not yet law. HMRC consulted on the details in summer 2026. The consultation on timely payments in Income Tax Self Assessment opened on 23 June 2026 and closed on 4 August 2026. The government response is expected in Autumn 2026. No final decision has been made yet. The final design could still change when the government publishes its response.

Currently, two main systems collect income tax in the UK:

PAYE deducts tax automatically from salaries and pensions.

Self Assessment asks individuals to report other income. This includes freelance

earnings, property income, dividends, or capital gains.

Why HMRC Wants This Change

HMRC says spreading payments through the year will help cash flow. It should also prevent large January bills. The official reason is taxpayer convenience.

The shift will start with taxpayers who have both PAYE income and Self Assessment income, such as:

• Side businesses
• Freelance work
• Rental properties
• Online selling
• Investment income

How the Current System Works and Why It Will Change

Under Self Assessment today, you usually make a balancing payment each January, after the tax year ends. Some people also make payments on account in January and July. This applies when the tax due exceeds £1,000.

But over 1.1 million people missed their payment on account this January. HMRC had to chase the overdue amounts. This has pushed the government to find ways to secure payments earlier and cut late settlements.

The 2026 Reform: Who Will No Longer Need a Tax Return

This part has drawn the most interest. If HMRC moves certain income streams into PAYE coding adjustments, many people may never file a Self Assessment return again.

You may no longer need a Self Assessment tax return after 2026 if:

• You are fully taxed under PAYE
• Your extra income can be collected through tax code adjustments
• You have no complex income that needs manual calculation

Examples include:

• Small, steady amounts of freelance income
• Modest rental income with predictable tax due
• Investment interest with amounts known in advance

Who Will Still Need a Tax Return After 2026

Not everyone will leave Self Assessment behind. Many taxpayers must still file because their income is complex or irregular.

You will still need to file a Self Assessment return if you:

• Have income that cannot be collected accurately through a tax code
• Own multiple rental properties
• Earn irregular seasonal income
• Receive large capital gains
• Need to claim reliefs and allowances
• Are self-employed with fluctuating profits
• Have foreign income or two-country tax residencies
• Have trust income
• Operate as a partner in a business

Will HMRC Increase PAYE Coding Adjustments

Under the new rules, HMRC will gain power to adjust your PAYE tax code. It could then collect tax from sources that traditionally fell under Self Assessment. This is a major change. Right now, HMRC cannot adjust your code for self-employment or property income unless you agree.

The £3,000 limit on coding adjustments may also be reviewed. More taxpayers could see K codes. These reduce your tax-free allowance or add tax liabilities directly into your PAYE calculations.

Accountants have raised concerns:

• Many taxpayers already find tax codes confusing
• Monthly code changes could become stressful
• Coding errors could cause overpayments or underpayments
• Refunds could become slower
• Seasonal earners may pay tax before receiving income

Key Concerns Raised by Experts

Professional accountants and tax bodies have flagged issues HMRC must resolve:

Tax code accuracy remains unreliable.

Seasonal or irregular income is hard to forecast.

Coding adjustments could cause cash flow problems.

Disputes and refund requests could increase.

HMRC’s digital infrastructure may not be ready for widespread real-time changes.

Self Assessment needs no human intervention. Tax code adjustments rely on

assumptions that may prove wrong.

Does This Mean the End of the Annual Tax Return

No, not yet. The Self Assessment system will still exist, but:

• Fewer people will need it
• Fewer taxpayers will file manually
• PAYE will absorb more tax collection functions
• Digital and automated systems will gain priority
• MTD for Income Tax will continue as planned from April 2026

The New Reporting Roadmap: Making Tax Digital (MTD)

The “scrapping” of the annual tax return is really a move to quarterly digital reporting. Your “qualifying income” means your total gross income from self-employment and property. Depending on it, you must switch on these dates:

The Bottomline

HMRC’s upcoming changes carry one clear message. A significant shift is coming. It will push the UK tax system closer to real-time digital collection. For many taxpayers, the annual Self Assessment process may disappear. For others with more complex affairs, the traditional tax return will stay necessary.

The reform aims to simplify tax collection, but practical challenges remain. Coding accuracy, refunds, seasonality, cash flow, and system reliability all need attention. Until then, stay informed. Prepare for more frequent tax updates in the years leading up to 2029.

Note: the “traditional” January-to-January cycle is breaking. Taxpayers will actually deal with HMRC more often, not less. Quarterly interaction comes from the Making Tax Digital (MTD) rules launching in 2026.

Disclaimers (October 2026 version)

Disclaimer:

This guide provides general information about UK Self Assessment as of October 2026. Tax rules and HMRC guidance can change. Always consult with a qualified tax professional about your specific circumstances. That’s what we’re here for. In accordance with our normal practice this reference is given in good faith and in confidence, without legal liability on the part of the author or the company. The author assumes no responsibility or liability for any errors or omissions in the content of this site

The information provided in this blog is for general guidance and educational purposes only and does not constitute financial, tax, accounting or legal advice. iFiler, registered in England under Company Registration Number 15996173, has prepared this content to offer general insights into financial and taxation matters. Although every effort is made to ensure the accuracy and relevance of the information at the time of publication, no guarantee is given regarding completeness, accuracy or suitability for your specific circumstances.

Readers should not act, or refrain from acting, based solely on the information contained in this content. Professional advice tailored to your personal or business situation should always be obtained before taking any financial or tax related decision. iFiler accepts no liability for any loss or damage arising from reliance on the information presented in this blog.