Self Assessment (SA) taxpayers have to make payments on account to HM Revenue & Customs (HMRC) twice a year. The dates are 31 January in the year of assessment and 31 July after the year of assessment.
There are many different ways to pay HMRC, which are explained below:
Before Direct Debit payments can be set up, you need to register for Self Assessment Online which can be done by following this link to the HMRC website http://abytx.co/1gTBBUc
Payment by Direct Debit offers a range of options. You can pay HMRC by single payments on 31 January and 31 July, or stagger payments using HMRC’s Budget Payment Plans.
Budget Payment Plans are only available to taxpayers who are up-to-date with their payments and allow you to:
- decide the amount you want to pay each week or month
- change your regular payment
- stop making payments for up to 6 months
- cancel payments at any time.
It is important to remember that whichever Budget Payment Plan is adopted, payment in full has to be made by 31 January and 31 July, otherwise HMRC will charge interest.
Online by debit or credit card
You can pay online using your debit or credit card, but it should be noted that if you pay by credit card a transaction fee of 1.4% will be charged. HMRC does not accept American Express or Diners Club credit cards.
HMRC uses the BillPay service provided by Santander Corporate Banking and such payments take three bank working days to clear (not weekends or Bank Holidays), so it is advisable to allow enough time for payment to clear in advance of the payment dates to avoid any interest charges.
HMRC recommends that separate payments are made for each SA reference, rather than payment in bulk. A bulk payment covering several different SA references needs to be made via the Accounts Office shown on the payslip, to ensure the payment is allocated correctly.
Payment can be made by cheque or cash at your bank or building society, if it offers the Bank Giro service. You will need to take your HMRC payslip with you and make your cheque payable to HM Revenue & Customs only followed by your Unique Taxpayer Reference (UTR).
Cheque, cash or debit card payments can also be made at the Post Office. Again, you will need your HMRC payslip and to make your cheque out to Post Office Ltd.
You will need to be conscious of the clearing time required, which is at least three bank working days, for your payment to reach HMRC.
Cheques and your HMRC payslip should be posted using the pre-addressed envelope enclosed with the payslip, or sent to HM Revenue & Customs, Bradford BD98 1YY.
Cheques should be made payable to HM Revenue & Customs only, followed by your UTR and enough time allowed for the cheque to actually arrive with HMRC and to subsequently clear.
HMRC will accept a post dated cheque by prior agreement or if the cheque for the full amount arrives before the payment date. However, a covering letter should be enclosed with the cheque, otherwise HMRC’s automated system will simply present the post dated cheque to your bank or building society straightaway.
Through your tax code
Payment can be made through your tax code if you have income which is taxed under PAYE and the amount is less than £3,000.
You have to earn enough income to pay enough tax for HMRC to collect the underpayment in one year.
Author: Guy Smith, Senior Tax Consultant on the ReSource Tax and VAT Consultancy Team.
- Interest and penalties charged by HMRC for paying tax late – Day 6 of 25 days of tax tips (abbeytaxblog.co.uk)
- Payments on account: dates due and calculations – Day 4 of 25 days of tax tips (abbeytaxblog.co.uk)