How to Pay Your Self Assessment Tax Return

We’re looking at how to pay your self-assessment tax bill.

So where to start? There’s a little calendar here to show you what money needs to be paid when. I’m taking the 2019-20 tax year as an example. So if you wanted to look at the 2020-21 tax year, just add an extra year onto all these dates.

The tax year ends on 5th April 2020. By the 31st of July, a second payment on account is needed. This would have arisen when you did your 2018-19 tax return. There is a separate video on what ‘payment on account’ is all about – I suggest that you look that up on on my YouTube channel.

If you are going to be doing a paper tax return, the deadline is 31st October 2020. Most people nowadays are doing online tax returns, or their accountant is doing online tax returns for them. But for things like partnerships, if you don’t have specialist software you will need to file your partnership return by the 31st of October. If you have a partner form, that can still be done electronically on the HMRC website.

There is another deadline that a lot of people don’t realise – 30th December 2020 is the last day you can get your tax bill paid through your PAYE coding. This is possible if you have less than £3000 to pay the tax man. You can do this electronically, but if you want to do a paper one you must do it by 31st October.

31st of January 2021 is when you need to have submitted your self assessment tax return. It is also the date you need to pay your self assessment tax return, including any payment on account for the next tax year. Everything has to be paid, including your Class 2 National Insurance. If you do not pay your Class 2 National Insurance by that date, HMRC will remove it from your tax return and you will not collect one year of payments for your state pension and benefits.

There are various ways you can pay your tax return, which are all listed on the self assesment tax bill section on the gov.uk website.

The options that are available are:

There are some things that keep dropping out; for example, you used to be able to pay by personal credit card, but that is not an option anymore (we think it’s because they couldn’t charge credit card fees or admin fees for it – that’s me being cynical). You also, for some strange reason, now can’t actually go to the post office and pay it (really weird).

  • Direct debit. You can set this up via your online accounts, and you can set it so it just takes one payment from you.
  • Online bank transfer. This goes direct to their bank account.
  • Personal debit card. This can be done either by phoning HMRC or using your online account.
  • Your bank or building society. You will need the official remittance slip to do this.
  • You can create the remittance slip.
  • Various instalments and budget plans etc.

Let’s take the easiest one, which is online bank transfer from your banking app. Here are the two accounts you need to pay into:

Always check the website before you just run it with these, just in case (I cannot be held responsible for any change of bank that HMRC might put through!). So please check the website to make sure there aren’t any errors and the bank account hasn’t changed.

Your payment to make will be on your remittance slip, if you filed your tax return early enough and HMRC have sent you a statement (you would need to have filed by October, maybe November, in order to get one but it’s not automatically sent). I haven’t worked out what the trigger is for them to actually send you a statement or not, so I always look at what’s been calculated. If you have a tax agent, look at what they’ve sent you as to how much you need to pay.

If you’ve got a payment on account, don’t forget you may have made one last year. The HMRC calculation will tell you what your in-year tax bill is and your future payment on account. It does not tell you what you’ve already got sitting there – some people forget that they’ve already made a payment and pay everything all over again and have therefore mega overpaid HMRC. And that’s fine, if you know you can get it back, but a lot of people don’t realise that! If you’ve made this mistake, I have another guide on how to claim an overpayment.

If you don’t have a remittance slip and so don’t know which account you need to pay into, use the details for HMRC Cumbernauld (shown in the picture above). There are instructions for this on the gov.uk website (the number of people I get who haven’t read the instructions and come to me saying, “but where do I pay it to, where do I pay it to”, well, here you go). So, if you have no official remittance slip from HMRC, pay into the Cumbernauld account. You must quote your reference number, which is your unique tax reference number followed by a K, which indicates that it is self assessment.

If you don’t put a reference number in there, HMRC will have it sitting in their suspense account not knowing where to allocate it, and you will have to fight them saying, “I have paid I have paid please get rid of my fines etc.”. They should be able to trace it, but it might take some time. So make sure when you do pay, you quote your unique tax reference number followed by a K.

It takes 72 hours for the payment to go through, so there’s no point in making a payment from your bank account directly to HMRC and then logging into your tax account expecting to see the payment there. You will see it in your account within 72 hours, and you should then be able to see the account balances dropped and a note with the date that the payment was received. So, always make sure you give it 72 hours before you start to look at it and go, “where’s my money?!”

Payments must be made by the end of banking day. And I know this is a very old fashioned term, but it really needs to be in by 3:30pm Monday to Friday. For example, if the tax payment deadline (31st of January) is a Sunday, you need to make sure you pay by 3:30pm on the Friday. There are ways around it and certain types of payments will get credited the date it leaves your account, but, just in case, make sure it leaves your account and can get to them by 3:30. Just be safe. That’s all I can say, just stay safe.

To pay by debit card you will need to log into your personal account. I will show you how to do that later on in this guide. And as I stated before, you cannot use a personal credit card any more.

Payment will be taken in full. If you don’t want to pay in full, you need to find a different method of payment – I would suggest that you pay by online banking and not use a debit card.

Using a debit card

If you make the payment by debit card, and it is after 3:30pm, or Saturday or Sunday, HMRC have stated they will accept the payment on the date you made it and not the date it actually arrived into their account. So if it happens to be a bank holiday, if it happens to be a weekend, they will take it from the date it left your account. And this does vary depending on the method.

Paying at the bank

If you physically go to the bank wanting to make a payment, you must have the official paying in slip from HMRC. This is on the bottom of the statements they send you if you have one. They are normally sent out late November, early December (I have seen some come out in January). But as I said, there is no way of knowing who will get a statement and who will not get a statement.

Make sure it’s made out to “HM Revenue and Customs only”. You need to put on your 11-character payment reference (your unique tax reference number followed by K). Again, it is based on the date you paid it. So if you’re physically going to a bank, most banks close at 3:30. If you’re lucky, some of them might stay open to 4:30. So, if you’ve got it to the bank by the end of their business day, then they will accept that it was done. Remember that business days are Monday to Friday – if you go into a bank to pay it on Saturday it will not count. It’s all very confusing!

Paying by cheque

You can still put a cheque in the post – woohoo, I like this one!

The cheque must be made out to “HM Revenue and Customs only” and you must have your 11-character payment reference on it. You put it in an envelope (I know these things still exist!), you post it to HMRC, Direct, BX5 5BD. That’s the whole address. Don’t worry, it’ll get there!

The cheque must go with a remittance slip. There’s no point in just posting a cheque, even with the payment reference on it, as they won’t accept it. The next few pictures will take you through how to create that payment slip.

How to create the remittance slip

Copy and paste this link into your browser to create your remittance slip:

http://www.hmrc.gov.uk/gds/payinghmrc/payslip-sa1.htm

You will be greeted with this screen:

Steps:

  • Enter your name (hopefully you know your name!).
  • Enter your phone number.
  • Enter your unique tax reference number. The system has already put a K on it so you don’t have to remember that.
  • You don’t have to put your national insurance number in there, but you can if you want to make doubly sure it gets there, or to give them a different reference number if there’s some kind of problem.
  • Click on either January or July depending on when you’re making the payment and what year you’re paying.
  • Finally the amount you’re going to pay.
  • Click Create payslip.

I’ve taken out all the data here, but here is what it will look like:

 

Print the payslip using a printer. There’s no point in printing it to a PDF unless you just want to keep a copy. Some people like belt and braces, they will print their payslip and they’ll also take a photocopy of the cheque they’ve sent and will date that piece of paper as to when they physically put it in the post, but that’s all up to you. 

Instalment options

There are instalment options, especially for the 2019-20 tax year due to the Coronavirus.

For this option you must have actually filed the tax return. You can then set up a time to pay agreement if you cannot pay it on time.

You can also set up a budget plan if you’re trying to pay before it’s actually due. There are limits to this; you can only pay up to £30,000 and you cannot have any other plan outstanding at the moment. You can decide how much you want to pay them. So, in the ideal world, you could turn around and say, “hello, I’ve got a £12,000 tax bill, I want to pay it in £1000 instalments”. If you only have a few months to pay in, that’s fine, you could pay it in £2000 instalments and get rid of it in six months. So it is completely up to you, and they will suggest how much to pay per month.

To  set up one of these, if it was to do with your 2019-20 tax return, you can do it via your online account because the instalment option is there specifically for COVID affected people. Alternatively you can call the payment support service on the number 0300 200 3822. It must be done before the payment is due, it cannot be done after.

If you’re doing a time to pay agreement, you must have it set up on a direct debit. If you default on any payment on that payment plan, they will demand that you repay the whole outstanding amount in full within X number of days.

Got all that? Okay!

So what we’re going to do now is log into our personal account and our business account and actually make a payment. Follow this link:

https://www.access.service.gov.uk/login/signin/creds

You will be directed to this screen:


Sign in using your 12-character Government Gateway ID, which could be a combination of letters and numbers, or just numbers, and then click Sign In.

If you don’t think you’ve got an online account, then I have  a different guide on how to set one up. Hopefully you do have access to your online account, and you haven’t just left it all to your accountant or tax agent to do!

Now you’re going to navigate to your business tax account (mine automatically goes to the business tax account).

Paying Self Assessment

If you’ve gone into a personal tax account, you’ll find there is a bit more of a menu on this page where you can log into your business tax account. Now you want to scroll down until we get to the self assessment section:

 

Here it will tell you how much you need to pay. I strongly recommend you write down your self assessment unique tax reference number, just in case. But more importantly, you must write down the amount you owe. It will tell you how much you owe to the 31st of January. These are very important; write it down.

Now you can choose your method of payment.


The bank transfer is the second option, but I’m actually going to take you through the debit card one. There are obviously other ways you can pay but this specific guide is just for debit cards. If you did want to go for direct debit, it can take up to four or five days for it to process so don’t try and do that one if you’re in a rush. It will tell you the earliest date it can pay it and if that’s after the deadline, it’s not HMRC’s fault you’ve paid it late, it’s your fault.

Choose the debit card and click Continue.

Now, pretty obvious, you’re not going to have a corporate credit card, but it’s just up in the same screen. There are no fees if you’re going to pay by debit card or by bank transfer. Corporate credit cards, they can charge a fee for. But obviously, you won’t have a corporate credit card, and people aren’t allowed to charge fees for personal credit cards which is why they’ve got rid of it.

Always, always, always, if you’re using a debit card, make sure you’ve got at least three days for it to go through. I know when I do my bank transfer, it automatically defaults to faster payments. So it’s there within two hours. With a debit card, you would have thought the same, but just put in some leeway for three days.

Click Continue. Then it wants you to put in the amount you want to pay. Now, my logical head says, “well, surely it should carry forward the number from the prior screen”, but it doesn’t – in case you don’t want to or can’t afford to pay it all. You might decide to pay a certain amount now and then go into some kind of payment plan. That’s absolutely fine, and you can utilise that and do two different methods of payment (three, if you fancy!).

Enter the amount to pay, and click Continue. The website will ask you to put in the address that’s related to that debit card.

 

 

There is no search facility – normally, when you’re filling in an HMRC form, it’ll say, “search address”, and you put in the number and the postcode (no idea why this doesn’t, but okay).

Enter your address that your debit card is registered to, and then enter your email address in case there’s any issues. You don’t have to,  but in case there’s a problem I would rather that they emailed me and told me, and then I work out whether it’s spam or not, rather than not paying it and then find I’ve got a whole load of fines and late penalty fees, because I didn’t realise I hadn’t actually paid it.

Click Continue.

On this page you can check your details. Obviously, I have removed the details because protecting the innocent (that’s me). It will tell me the tax reference I’m paying against, the amount I’m paying, and the billing address.

That’s not quite it, you now have to enter your card details!

 

Work through the form (and think, “okay, okay, I can do it, I can do it, do I really want to pay it, oh okay, all right”). Click on Pay Now. It then it tells you that you have made the payment and the reference number you have quoted. It doesn’t give any kind of receipt,  it just goes, “you’ve done it!”.

What happens now? I would actually download that page and save it as a PDF. And I would date the PDF as the date you paid it because at least that gives us some evidence to say, “yes, I did, yes, I did pay”.

And then we are done!

It will show you a warning that it’s going to take three to five days to show on your account – the idea of that being is it in theory takes up to three days for the payment to go through and then It normally takes 72 hours for it to appear on your account.

And that is how you pay. You end up going back to your business tax summary and none of it will change. So although one section says it takes three to five days to show in your account, another says it will take up to seven working days. So take whichever one you want.

So there we go – that is how you pay your tax bill using various different methods and the instructions there were using the debit card method. I have to say most people would normally pay by online banking, but of course you might not have online banking.

Hope that helps, and if you have any problems feel free to drop me an email.

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