Paying Your Self-Assessment

Paying your self-assessment liabilities in January is relatively easy, if not painful.

What do you have to pay by 31 January?

On 31 January, you may need to pay the following amounts related to your Self-Assessment:

Balancing Payment for the Previous Tax Year

• This is the remaining tax you owe for the tax year that ended on 5 April of the previous year.
• It accounts for any tax owed after deducting payments on account (if applicable) and other adjustments like PAYE or tax credits.

First Payment on Account for the Current Tax Year

• If your previous year’s tax bill was over £1,000, HMRC usually requires you to make two “payments on account” for the current tax year.
• Each payment on account is 50% of your previous year’s tax bill (excluding any Capital Gains Tax or student loan repayments).
• The first payment is due on 31 January, and the second is due on 31 July.

Any Late Filing or Payment Penalties (if applicable)

If you missed previous deadlines or are late filing your return, penalties and interest may also be payable.

Total Due:

• Balancing payment + First payment on account + Penalties/interest (if applicable).

Submit your Self-Assessment tax return on time to avoid additional penalties!

 

Paying your self-assessment

To pay your Self-Assessment tax bill in January, follow these steps:

Check How Much You Owe

• Log in to your HMRC online account.
• Go to the “Self-Assessment” section to see your bill, including any payments on account or balancing payments.
• Check this to ensure the amount agrees with the expected amount from your tax computation.

Payment Options

You can pay your bill in several ways:

Pay via your HMRC online accounts

This is probably the easiest way to pay.

• Pay through the HMRC payments service.
• Note: Personal credit cards are no longer accepted.

Direct Debit

• Set up a one-time Direct Debit through your HMRC online account.
• Allow at least 5 working days for the first payment.

Bank Transfer

• Transfer from your bank account to HMRC’s account using the details above.
• Payments are usually processed on the same or next working day.

At Your Bank or Building Society

• You’ll need a paying-in slip from HMRC.
• Cash or cheque payments are accepted.

What do you do if you can’t pay the Self-Assessment by 31 January?

If you can’t pay your Self-Assessment tax bill by the 31 January deadline, take the following steps to avoid additional penalties and interest:

Contact HMRC as Soon as Possible

• Call HMRC on 0300 200 3822 or use their online services to discuss your situation.
• It’s better to inform them in advance to demonstrate your intention to pay and avoid enforcement action.

Set Up a Payment Plan (Time to Pay Arrangement)

• HMRC may allow you to spread the cost over a longer period, typically up to 12 months.
• You can apply online if:
  • Your tax bill is £30,000 or less.
  • You don’t have any other payment plans or debts with HMRC.
  • Your tax return is filed, and you set up the plan within 60 days of the deadline.
• For larger debts or more complex situations, you’ll need to contact HMRC directly.

Pay What You Can

• Even if you can’t pay the full amount, make a partial payment to reduce the interest charged on your remaining balance.

Be Aware of Penalties and Interest

Interest: Charged daily at 6.5% per year (as of late 2024) on unpaid tax.

Penalties:

• • 30 days late: 5% of the unpaid tax.
  • 6 months late: Another 5%.
  • 12 months late: Another 5%.

The earlier you act, the more options you’ll have to avoid severe penalties and interest.

Speak to your accountant if you need help paying your liabilities or submitting your return.