How to pay Self Assessment tax

Every year self-employed individuals or people with additional income must pay Self Assessment tax. Since an employer doesn’t tax these income streams for you, you’ll have to file a Self Assessment tax report and then pay any outstanding liabilities. Last year there was a record-breaking 10.4 million people submitted Self Assessment returns.

It’s essential to plan throughout the year for how to pay Self Assessment tax. Without some forward planning, it’s easy for this tax bill to catch you off guard and unprepared, especially if you’ve had a good year, as the Self Assessment tax is a percentage of your annual profit.

Thankfully, there are many different ways you can pay your Self Assessment tax to make payments more manageable. Keep reading to learn more about:

  • When your Self Assessment tax is due
  • How to pay Self Assessment tax
  • Payment options

Self Assessment deadlines

You have to submit your Self Assessment return at the end of every tax year. It’s essential to register before the Self Assessment deadline (if you haven’t submitted a previous year) and submit your return by the deadline. 

If you’re submitting your return via paper, the deadline is the 31st of October, while electronic submissions have until the 31st of January. 

On the 31st of January, you’ll also need to pay any tax owed from the previous year (also known as a balancing payment) and make your first payment towards this year’s tax bill. Once you’ve made those payments, you then have until the 31st of July to pay the second payment.

While you could leave your electronic form until the final day, it’s helpful to plan ahead, submit early and give yourself plenty of time to set aside enough money to pay your tax bill. After all, you don’t want a last-minute dash to submit and then find yourself with a surprising tax liability.

Apps like Countingup give you running tax estimates so you can confidently set aside the right amount for what you owe.

Options for how to pay Self Assessment tax

You can either pay your Self Assessment tax in full by the deadline or in monthly instalments to spread the cost.

Pay in full online

Paying online is simple and straightforward. You need to log in to your Government Gateway account and you’ll be able to pay directly

Pay in monthly installments

If you can’t pay your Self Assessment tax bill in full, you can set up a monthly payment plan to spread the cost and make it more manageable. However, to qualify for monthly payments, you’ll need to meet a few criteria like:

  • Your tax bill is under £30,000
  • You don’t have any other payment plans or outstanding balances with HMRC
  • You’ve submitted your tax returns on time
  • You’ve requested the payment plan within 60 days after the payment deadline

If you meet the criteria, you can choose how much to pay straight away and how much you want to pay each month. While this can be a good option for protecting your cash flow and easing your tax liability, it’s important to note that you will need to pay interest, and if you fall behind in payments, HMRC can request a payment in full.

How to pay Self Assessment tax via monthly installments

If you decide to pay your Self Assessment tax in monthly instalments, there are two ways you can set this up:

  1. Set up the payment plan online in your Government Gateway you’ll need your Government Gateway ID and password.
  2. Call HMRC’s Payment Support Service, and they’ll walk you through the process.

Make regular payments in advance

If you’ve already filed your Self Assessment tax return, you might be able to pay the bill in portions. You can set up a budget payment plan with HMRC to help you put money aside and plan for your next Self Assessment tax bill. Setting up a payment plan can be a good idea so you can save throughout the year and aren’t panic-stricken when tax deadlines roll around.

Making regular payments in advance is essentially like setting up a budget payment plan. You make payments every week or month into a secure account which you can then use towards your future tax bill. With this scheme, you can decide how much you pay and pause for up to six months.

You can set up a Direct Debit for this budget payment plan in your Government Gateway account. It’s important to note that if the amount you’ve saved doesn’t cover your next bill, you’ll need to pay the remainder before the tax deadline.

Even if you don’t use the government’s budget payment plan, it’s a good idea to create a budget and set some money aside each month towards your yearly tax bill.

Payment Methods

HMRC has made it relatively straightforward to pay your Self Assessment tax bill. It’s important to pay before the deadline to avoid interest and penalty fees on late payments.

You may need to allow for processing time, depending on the payment method you choose. Remember to account for non-working days, like weekends or bank holidays, as these can hold up payments and could cause you to miss the deadline. If you’ve forgotten to factor non-working days in, making your payment via Faster Payments or by debit or credit card is your best option.

Payments in 1-2 working days

If you’ve left it until the last minute, you’ll need to select one of the below options to make sure your payment arrives in time:

Payments in 3 working days

If you’ve planned ahead, these options will allow your payment to reach HMRC in 3 working days.

Payments in 5 working days

Setting up a Direct Debit can be a good idea as that way, the payment will be taken automatically and you won’t need to remember to pay by the deadline. If you want to set up a Direct Debit, you’ll need to plan ahead as it’ll take up to 5 working days to get one in place if you haven’t set one up before.

Make financial management easy with Countingup

When you sign up for a Countingup business current account, you get free built-in accounting software that automates the time-consuming aspects of bookkeeping and tax planning, so that you can spend less time on your Self Assessment and more time running your business. You also get live profit and loss reports, cash flow insights, tax estimates, and instant invoices. 

Keep your finances running like clockwork. Download the Countingup app today.