Proposed changes to the way some self-assessment taxpayers pay income tax could create additional work for employers and lead to financial difficulties for some workers, the Institute of Chartered Accountants in England and Wales (ICAEW) has warned.

The concerns relate to government plans to collect certain self-assessment tax liabilities through the Pay As You Earn (PAYE) system. Under proposals announced in the 2025 Budget, people with self-assessment income tax liabilities who also receive PAYE earnings could be required to make estimated tax payments during the tax year from April 2029.

Concerns Over Employer Workload

According to the ICAEW, introducing the changes through payroll systems could create additional administrative responsibilities for employers. Businesses may have to deal with more complex payroll processes and increased tax coding notices, potentially adding to their costs.

The professional body has also raised concerns about confidentiality. Collecting tax relating to income outside employment through an individual’s workplace could mean employers become aware of aspects of an employee’s financial affairs that would normally remain private.

Potential Cash Flow Problems for Taxpayers

The ICAEW warned that the proposed system could be particularly challenging for people whose income changes significantly during the year.

Those with fluctuating earnings could face difficulties if estimated tax payments do not accurately reflect their actual income. This could create cash flow pressures and make it harder for some taxpayers to meet their regular financial commitments.

HMRC Capacity Also a Concern

The ICAEW has highlighted wider concerns about pressure on HM Revenue and Customs (HMRC) systems. It said existing service pressures could make the implementation of further payroll-based tax requirements more difficult for taxpayers, agents and businesses.

Adelle Greenwood, tax technical manager at the ICAEW, said the organisation was concerned about adding further complexity to an already demanding administrative environment.

She also warned that the transition could potentially influence how employees manage their economic activity if the new arrangements create significant additional financial or administrative pressure.

Employers Face a Challenging Transition

The proposed changes are not currently due to take effect until April 2029, giving businesses and policymakers time to consider how the system could be implemented.

However, the ICAEW is calling for the potential impact on employers, payroll teams and taxpayers to be carefully assessed before the reforms are introduced.

The organisation’s warning comes as the government continues to explore changes aimed at collecting tax more regularly throughout the year rather than relying solely on the existing self-assessment payment timetable.

Businesses and payroll professionals are likely to be watching the consultation process closely as further details of the proposed system emerge.

Source: Accountancy Today / ICAEW. Report published 12 August 2026.