Keeping on top of Income Tax can be tricky. It’s important to remember that filing your Self Assessment might not be the end: you might need to pay a tax bill too! This article covers the essentials when it comes to fulfilling your tax obligations. Alongside explaining how to pay Self Assessment tax online, we provide comprehensive answers to frequently asked questions.
What is Self Assessment Tax and How Does it Work?
Self Assessment is one of HMRC’s systems for collecting Income Tax. Although many people pay Income Tax through automatic wage and pension deductions (via an employer), some individuals might need to file Income Tax through Self Assessment and pay tax bills separately.
Sole traders and self-employed landlords are typically expected to file Self Assessment. You might also need to file a Self Assessment return if you:
- Earn over £150,000 in taxable income
- Receive foreign income
- Are involved in business partnerships
- Earn income from savings or investments
- Need to report capital gains
Essentially, Self Assessment covers annual income that is not taxed at source. Nowadays, Self Assessment is usually filed and paid online (rather than in paper format). It is your responsibility to calculate and pay the correct amount of tax to HMRC on time.
How To Pay Self Assessment Tax Online
There are two steps to paying Self Assessment tax online. First, you need to calculate the tax you owe and submit a Self Assessment tax return. Second, you need to make a payment to HMRC.
How to file Self Assessment online with AbraTax
To help you file Self Assessment, we recommend our currently free service: AbraTax Self Assessment. In addition to step-by-step guidance, we provide:
- Individually tailored tax returns
- Support for filing supplementary pages
- Automated tax calculations
- Form validation (error-checking)
- HMRC-recognised and secure service
Filing your Self Assessment return with us is quick and simple – it only takes five steps:
1) Register for AbraTax Self Assessment
2) Fill in your personal details
3) Tell us about your income
4) Let us calculate your tax owed
5) Submit your return
When completing your Self Assessment return, make sure to disclose any and all forms of untaxed income. To avoid later complications, it’s essential not to overlook anything at this stage. One common pitfall is forgetting to report income from side hustles such as Airbnb or other sales-related websites (e.g. Vinted, eBay, Depop).
For an in-depth guide to Self Assessment returns, check out our comprehensive guide. For details about HMRC’s stance on online sales, have a look at our article on digital platform rules.
How to pay Your Self Assessment tax online
Once you have submitted your Self Assessment return, you will likely need to pay a tax bill. The most common way to do this is online. If choosing to pay online, this must be done through the official HMRC website. However, there are two options:
Pay your Self Assessment bill via Government Gateway
Paying via Government Gateway is simple. Begin by selecting this option:
The login details needed are the same which you use to submit your Self Assessment via AbraTax:
Once logged in, navigate to your Self Assessment home and select “Make a Self Assessment payment”.
From here, you can select a payment method and send the tax you owe to HMRC.
Pay Your Self Assessment bill without signing in
It’s possible to pay your tax bill online without signing into Government Gateway. To do so, begin by selecting that option:
The next step is to enter your UTR (Unique Taxpayer Reference), so that HMRC knows which taxpayer’s bill is being paid:
Next, enter the amount of tax owed (according to your Self Assessment tax calculation):
Finally, choose a payment method and complete the payment:
It’s important to remember that it can take up to a week for your payment to show in your account. As such, it’s useful to sign into Government Gateway later to make sure that it has gone through successfully. If there are any issues, contact your bank and/or HMRC as soon as possible to clarify the status of your tax bill.
FAQs
What are ‘payments on account’?
Payments on account are advance payments for your next tax bill. They are based on last year’s tax bill, if applicable.
Typically, payments on account are expected to be paid twice annually – by midnight on 31 July and 31 January. Each payment equates to half of the total tax you owed last year. The aim is to spread the cost of tax payments for you, and to provide a more regular income for HMRC.
You are not required to make payments on account if:
- You owed less than £1,000 in tax last year
- You paid more than 80% of your tax owed last year outside of Self Assessment (e.g. via your bank deducting interest on savings, or via your tax code).
What is a ‘balancing payment’?
A balancing payment is required if you still owe any tax from the previous tax year. This should usually be paid by the 31 January deadline, when you will also pay the first payment on account for next year (if applicable).
What if I paid too much tax?
If you have paid too much tax, you can claim a tax refund (also known as a ‘rebate’ or ‘tax repayment’). HMRC provides an online tool for checking how to claim your tax refund.
If you are due to pay more tax within the next 45 days, e.g. a payment on account, you might not be granted a refund. Instead, the overpayment amount will be applied towards the tax you owe. This dynamic approach is an essential part of paying Self Assessment tax online.
What if I pay my bill late?
If you pay your bill late, or fail to pay it at all, you might receive a penalty fine. This is because it is a legal requirement for you to comply with HMRC and any tax obligations.
Fines begin with a 5% surcharge on any tax due (30 days after the payment deadline). Further fines will be imposed at later stages, such as 6 months and 12 months after the deadline, if tax remains unpaid.
In addition, you can be charged interest on the tax due, as well as receiving penalties for any late Self Assessment submissions. It is essential to keep on top of all HMRC deadlines to avoid any issues.
Is the Self Assessment return and payment deadline the same?
Yes. The usual deadline is 31 January each year for both filing the Self Assessment return and paying the corresponding tax bill. This means that it would be advisable to prepare your Self Assessment early, so you have enough time to pay Self Assessment tax online in time.
Who needs to file a Self Assessment tax return?
Anyone who earns untaxed income exceeding £1,000 per tax year. This can include self-employed individuals (sole traders), landlords, and people in business partnerships. It can also include individuals with other types of income, such as capital gains, foreign income, pensions, investments, and dividends.
What payment methods can I use to pay Self Assessment tax online?
Payment methods accepted by HMRC include:
- Online banking
- Debit or credit card
- Direct Debit
- CHAPS
- Bacs
- Telephone banking
- Cheque (by post)
Theoretically, it is also still possible to pay in person via your bank/building society by cash or cheque. However, in-person payments are only possible if you have received a paying-in slip from HMRC.
What details do I need to pay Self Assessment tax online?
This depends on how you pay. There are two ways to pay Self Assessment online:
Paying via Government Gateway
If you decide to pay your Self Assessment tax bill via Government Gateway, you simply need to sign in as usual. These are the same details you used to submit your Self Assessment tax return:
- Government Gateway ID (up to 12 characters)
- Government Gateway password
Paying without signing in
To pay without signing into Government Gateway, you will need the following details:
- Unique Taxpayer Reference (UTR)
- The amount you wish to pay
Once you enter these details, you will need to select between payment methods (bank transfer, Direct Debit or debit/credit card). After this, you can proceed to pay.
What should I do if I cannot pay my Self Assessment tax on time?
If you cannot pay your tax bill on time, contact HMRC as soon as possible.
Depending on your circumstances, it might be possible to arrange a payment plan (called ‘Time to Pay’). This can be set up online via your Government Gateway account. According to HMRC, you can usually set up a Self Assessment payment plan if:
- You have filed your latest Self Assessment
- You are within 60 days of the upcoming payment deadline
- You owe £30,000 or less to HMRC
- You do not have any other debts or payment plans with HMRC
Whether or not the criteria above apply to you, it is essential that you contact HMRC as soon as possible to find a solution and avoid penalties.
If you are also concerned about filing your Self Assessment return on time, read our article on extending filing deadlines.
Conclusion
In this article, we have delved into how to pay your Self Assessment tax online. Paying your tax bill can be straightforward – as long as you stay informed, follow the simple steps outlined, and comply on time. In the process, you can also make use of handy online tools (such as AbraTax) to calculate your tax owed and submit your Self Assessment with ease.
If you want to make tax simple today, sign up for AbraTax Self Assessment – for free!