How to pay your Self Assessment Tax

You may already be familiar with the process of paying your Self Assessment tax bill.

Yet, it's always helpful to have a guide on hand-one that you can look over just before you make your payment, so you can be sure that you haven't missed out on important details that can put you at risk of incurring a penalty.

• Submission of Self Assessment tax return: You need to submit your online tax returns by 31st January. Paper returns are due earlier; these must be filed by 31st October.
• Payment: Any personal tax due for the previous tax year (6th April-5th April) must be paid up by 31st January. This means that your 2019/20 tax year must be paid up by 31st January 2021.
• Payments on Account: "Payments on account" are advance payments for your tax bill that are spread out across the year. You'll need to make two payments each year, and these are due on 31st July and 31st January.

Tip: If the payment deadline falls on a public holiday, make sure that your payment is submitted by the final working day.

To make your payment, use your 11-character payment reference (that's your 10-digit Unique Tax Reference (UTR) followed by the letter 'K'). Your payment is accepted on the day of payment, and not when it is received.

Making a payment at your bank or building society branch is a viable option, only if you're getting paper statements from HMRC and have kept your HMRC paying-in slip. Payments are accepted on the day you make your payment (if it is made on a weekday).

Transfers can be made using Faster Payments, CHAPS and BACS using your 11-character payment reference.

BACS payments usually take about three working days to be processed, while payments made using CHAPS are typically cleared on the same working day. Faster Payments are usually cleared on the same day, including weekends and bank holidays. 

Tip: Be sure to check in with your bank about the processing time if you're paying from abroad, as a longer duration of time might be required for the payment to clear.

You can set up a direct debit through your HMRC online account using your 11-character payment reference.

You'll need to set up single payments each time you want to make a payment. For example, if you're making a payment on account, you'll have to set up a direct debit twice-one for  31st January, and another for 31st July. 

It can take up to five working days for the payment to clear for the first time you set a debit up. Subsequent payments will take up to three working days to clear, provided that the same bank details are used.

You should make the cheque out to "HM Revenue and Customs only", followed by your UTR.

You'll also need to include your HMRC paying-in slip. It can take up to three working days for the cheque to clear, and you need to keep in mind to factor in additional time for mail delivery. 

Your cheque should be sent to: 

HMRC 

Direct 

BX5 5BD

Paying your Self Assessment tax bill through your tax code

To pay your Self Assessment tax bill through your tax code, you'll need to meet the following conditions: 

• You owe less than £3,000 on your tax bill
• You already pay tax through PAYE. For example, you're employed or you get a workplace pension
• You've submitted your paper tax return by 31st October, or your online tax return online by 30th December

If you meet these conditions, HMRC will automatically collect what you owe through your tax code, unless you've asked them not to do so on your tax return.

Tip: Do note that payments made at the post office or using a personal credit card are no longer permitted.

How will I know if my payment has been received?

You can check your payment status using your HMRC online account. It should indicate that you've paid up between three to six working days after you've made your payment.

What can I do if I'm unable to make my payment on time?

Being unable to pay up your tax bill is a stressful situation to be in, but there are steps you can take to set things right. 

You'll need to get in touch with HMRC as soon as possible to explain why you're unable to make your payment. Before you contact HMRC, make sure you have your UTR number and bank account details on hand, as well as an estimate of how much you're able to pay upfront.  

Depending on your circumstances, HMRC may agree to a payment plan. In this case, you won't be charged payment penalties (unless you miss a payment), but HMRC late payment interest rates will still apply. 

And even if you know beforehand that you're not able to pay up your Self Assessment tax bill, it's still important that you file your tax returns on time. This indicates that you're willing to set things in order, and will improve your chances of getting a payment plan set up with HMRC. 

Setting up a budget payment plan

Setting up a budget payment plan is a viable option if you are up to date with your previous Self Assessment payments.

With this option, you'll be making regular payments in advance instead of a lump-sum payment. You can decide how much you want to pay each week or month. If your payments over the year aren't sufficient to cover the total tax due, you'll need to pay up the outstanding amount by the payment deadlines.  

To set this up, use your HMRC online account. On the Direct Debit Section, choose the budget payment option when filling in the Direct Debit form.

A note on Making Tax Digital for Income Tax

Making Tax Digital (MTD) for Income Tax will be rolled out starting 6 April 2023. If you're a sole trader or landlord with an annual income exceeding £10,000, you'll need to abide by the MTD requirements for the 2023/24 tax year onwards.

Presently, you're still required to file your Self Assessment for 2021/22 and 2022/23, unless you've applied for the MTD for income tax pilot scheme (and have followed the requirements of the scheme).

There hasn't been any announcements made on whether the MTD rollout will affect how income tax payments are made.

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