Healey’s self-assessment tax shakeup could lead to ‘brutal cash crunch’ for self-employed

Chancellor John Healey’s decision to overhaul the self-assessment tax system has sparked concerns among tax advisers, as they question whether this will harm Britain’s self-employed. Healey confirmed in his maiden Autumn Budget that the government will change how income tax self-assessment (ITSA) taxpayers make their Payments on Accounts. Payments on Account are advance payments made by roughly one quarter of self employed Brits, according to Travers Smith. Under current rules, this group does not pay tax as they earn income over the course of the financial year, instead paying an estimated portion in advance every six months based on previous year’s earnings. As tax bills aren’t typically due until ten months after the end of the tax year, self-employed workers can face up to a 22 month delay between earning income and settling the tax owed with HMRC. Payment on Account enables HMRC to close the gap and prevent taxpayers from facing a substantial, delayed bill. From Ap