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Director Number 1 Way To Pay HMRC Self Assessment Tax Quickly

Tony Dhanjal

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So you’ve completed and filed your self assessment tax return with HMRC but now you’re wondering how to actually pay the resulting tax liability. After all HMRC are infamous for their late payment penalties and interest charges so it’s best to make sure no deadlines are missed.

In this article we will cover everything you need to know about how and when to pay HMRC self assessment tax liabilities.

When Should I Pay HMRC?

The deadline to pay HMRC self assessment tax liabilities will usually be the 31 January following the end of the tax year in question.

This means that for a tax liability that arises in the 21/22 tax year, you will need to pay HMRC by the 31 January 2023. A payment will be considered paid providing it is received by HMRC by midnight on the 31 January. 

Where you have made a payment but it has not cleared HMRC’s account this will not usually be considered as “on time”.

This deadline will usually apply irrelevant of whether the return was submitted online or by post despite these two submission methods having different filing deadlines.

Payments can usually be made as soon as you have completed and submitted your self assessment tax return and should show as paid on your online account within 3-6 working days.

If you pay via post then you can also include a letter with your payment to ask that a receipt is returned to you which will confirm payment was received and on which date.

There is also an option to have some smaller tax liabilities (less than £3,000) collected through your tax code if you already pay tax through PAYE i.e. you are employed or receive pension income. 

Of course in this situation there is no payment deadline as the cost is spread across the tax year but to qualify online self assessments need to have been submitted by 30 December.

Payments On Account

An individual will often need to make payments on account which are designed to ensure future tax liabilities are collected closer to when they are incurred.
In the first year of self employment this can come as a surprise to individuals who are unfamiliar with this process.
Typically in the first year of self assessment an individual will pay HMRC self assessment liability in full before the 31 January deadline that follows the end of the tax year. 
Before that same deadline the individual will also need to pay an additional 50% of the prior tax years liability which will act as a payment on account towards the following year.
A second payment on account is then made for the remaining 50% before the 31 July that follows. This ensures that (assuming that the following years tax liability is the same amount) then the full tax liability of the following year will have been paid by 31 July following the end of the tax year.
Of course the amount you pay HMRC each year will usually differ so any underpaid amount is known as a balancing payment and will usually be paid by 31 January following the end of the tax year along with another payment on account.
If the payments on account have resulted in an overpayment then this would be refunded by HMRC.
The individual also has the opportunity to reduce their payments on account when completing their self assessment tax return. This is particularly useful where taxable income is likely to be lower in future tax years. 
The individual would need to provide a reason for the reduction in the space provided on the return and specify the amount they believe will be sufficient.
Payments on account are not required for any individuals where either:
  •  The self assessment tax bill was less than £1,000, or
  • More than 80% of the tax owed has already been paid for example through your tax code or because your bank has already deducted interest on your savings

What Happens If I Don’t Pay HMRC Self Assessment Tax Bill?

If you miss the payment deadline and don’t pay HMRC by either the 31 January or 31 July deadlines then HMRC may apply penalties and charge interest on the unpaid amount. 

The amount of penalty that you pay will depend on the size of the liability and how long it remains unpaid. You will find a handy calculator on the website that will estimate late payment fees.

Just note that your penalty can be as much as 100% of your tax bill if you deliberately don’t pay it but if you are struggling to make payment then you should contact HMRC immediately as they can often assist with addition flexibility to pay HMRC self assessment liabilitie

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How To Pay HMRC Self Assessment Liability

You can pay HMRC self assessment liabilities is a number of different ways but it’s important to remember that the payment will need to have cleared HMRC’s account by midnight on the deadline day so you should choose a payment method that suits your time constraints.
Payment methods include:

  • Through your online bank account
  • Online of telephone banking (Faster payments)
  • By debit or corporate credit card online
  • At your bank or building society
  • Bacs
  • Direct Debit
  • By cheque through the post
Full details are available on the webpage or by logging into your government gateway portal and following the link to “pay your bill”.
Arguably the quickest and most popular way to pay HMRC self assessment liabilities is by debit or credit card online which can be done by clicking here.
You may also be interested to know that HMRC offer a budget payment plan that allows individuals to spread the cost of future tax liabilities by making weekly or monthly payments.
This is different to having liabilities deducted through your tax code as with the budget payment plan it’s the individual who determines the payment amount and frequency.

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Practice based accountant with over 10 years experience, specialising in SME's, Freelancers and Personal Tax. "I take pride in proactively recognising tax planning opportunities on behalf of clients to help them operate more efficiently."

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Disclaimer – all our content is for general guidance only and does not constitute formal advice. We always recommend you take professional advice.