Be aware of the deadlines.
You need to ensure you make your payments by the due date. Otherwise, you risk incurring a fine as well as interest on the unpaid amount.
If you are self-employed, you will be paying tax under the Self-Assessment system, which means your deadlines are as follows:
By midnight on 31st January to pay the following:
1) Any tax which you still owe from a previous tax year.
2) Your first payment on account towards your next tax bill.
3) Deferred second payments on account from 2021.
The next deadline is:
Midnight on 31st January 2022.
Allow enough time
Decide how you want to make your payment, and then work out how much time you need to allow to ensure the payment reaches HMRC in good time before the deadline.
When you are calculating how much time you should allow, you should also check whether the deadlines fall on a Bank holiday or a weekend. 31st January 2022 falls on a Monday and 31st July 2022 on a Sunday, so there are potential pitfalls there for the unwary.
If you decide to pay online, your payment will normally go through the same day or the next day at the latest. However, you cannot always be sure that online banking services will be available, particularly at busy periods. If you have left everything to the last minute, it would be frustrating to find there are problems with internet banking on the very day you needed it to work, perhaps because too many other people are trying to pay at the same time.
Different ways to pay
You will no longer be able to pay your tax bill at the Post Office, but you can pay at a branch of your Building Society or Bank by cheque or with cash.
You can only use this method of payment if you have the paying-in slip which HMRC would have sent you in the post, and you still receive paper statements.
If you choose this method of payment, provided you pay in normal working hours Monday to Friday, HMRC will accept your payment on the date you make it, rather than the date it reaches their account, which could be up to four days later.
Paying by cheque
Whether you are paying your cheque in at your Bank or Building Society or sending it via Royal Mail, your cheque should be made out to ‘HM Revenue and Customs only’ followed by your payment reference code.This can be found on your paying-in slip and consists of your Unique TaxpayerReference number followed by the letter ‘K’.
If you decide to post your cheque, it should be addressed to:
HMRC Direct, BX5 5BD.
You should allow at least three working days for your payment to reach HMRC. You will also need to include in the envelope the paying-in slip you have been sent. If you don’t have a paying-in slip, you can print one using this link, print a slip but this is only to be used when you are sending your cheque through the post, not if you pay at your Bank or BuildingSociety.
You should not fold your cheque or your paying-in slip, or staple, paperclip or fasten them together in any way.
If you would like a receipt to confirm that your payment has been received by HMRC, you can also include a written request forthis with your payment.
Many people prefer to use this method of payment because HMRC accepts the payment on the day you have paid it, irrespective ofthe date it reaches their account, and this includes Bank holidays and weekends.
You should be aware of how long your chosen method of online payment will take to process.
Payment system - When does payment reach HMRC?
Faster Payments - Same day or next day, including weekends and Bank holidays.
CHAPS - Same working day provided you pay within your Bank’s processing hours which you need to check.
BACs - Three working days.
Payments from an overseas bank may take longer to process, so you should check this with your bank.
Your tax bill will give you the information you need to pay online from your bank account using CHAPS, BACs or Faster Payments, but if you’re not sure which HMRC account to use, choose HMRC Cumbernauld.
Account Name Sort Code Account number
HMRC Cumbernauld. 08 32 10 12001039
HMRC Shipley 08 32 10 12001020
Account Name Sort Code Account number
HMRC Cumbernauld 08 32 10 GB62BARC20114770297690
HMRC Shipley 08 32 10 GB03BARC20114783977692
When you pay online, if you are paying tax due under Self-Assessment, you will need to use your Unique Taxpayer Reference(UTR) number followed by letter ‘K’.
This will be found on your tax bill and your paying-in slip if you have one, and also on your HMRC online account.
If you are paying more than one Self-Assessment tax bill, using multiple UTR numbers, you will need to send an online enquiry form, for which you can use this link Send an online CHAPS enquiry form.
The banking address for HMRC is:
Barclays Bank PLC
1 Churchill Place
London, United Kingdom
If you are paying Corporation tax, you will need your 17-character Corporation tax reference relating to the accounting period for which you are paying.
Paying by debit or credit card:
Personal credit card - You are not allowed to pay your tax bill using a personal credit card.
Personal debit card - You can pay by this method without a fee.
Corporate credit card - You can pay by corporate credit card, but you will be charged a non-refundable fee to do so from 1st November 2020.
Paying in instalments
If you have already submitted your Self-assessment tax return, HMRC may allow you to create a payment plan if you are not able to pay the full amount of the tax you owe in one lump sum. You can only do this if you owe less than £30,000 and if you don’t already have other instalment payment plans set up with HMRC.
You will be allowed to decide how much to pay immediately, and then how much you want to pay each month, but you will be charged interest on your debt. If you set up an instalment plan and then don’t keep the payments up to date, you may have to pay the total amount outstanding.
Payments in advance
Provided you don’t have any outstanding tax bills, you can set up a regular payment plan and decide how much you want to pay either weekly or monthly.
These payments will help towards your Self-assessment tax bill. These budget payments are not the same as your Self-AssessmentPayments on Account, which you make every six months.
You can set up your budget plan using your PersonalTax account.
Payments through PAYE tax code
Many self-employed workers also have some income from employment where their tax is deducted via the PAYE system. HMRC will allow you to pay your Self-Assessment tax bill using PAYE, provided you meet the following conditions :
- You do not owe more than £3,000 in unpaid tax
- You are already paying tax via PAYE
- You have submitted a paper tax return by 31st October or an online tax return by 30th December.
If all of these conditions are met, the amount of tax you owe will automatically be collected in this way by HMRC, unless you have requested them not to do so. Deductions will be made from your employed earnings or pension payments over a twelve-month period in equal instalments.
Payment through PAYE will not be possible if you would be paying more than 50% of your PAYE income as tax, or you don’t have sufficient PAYE income for tax to be collected, or you would be paying twice as much tax as you normally would.