There are several different ways you can pay your tax bill to HMRC. Most people are aware that there are substantial financial penalties if you miss the payment deadlines, as well as being charged interest payments. It is crucial that you consider the length of time it takes payment to reach HMRC, when you are choosing your payment method.
Self Assessment payment deadline
The deadline for your ‘balancing payment’ of any tax you owe for the previous tax year is 31st January. This is also the deadline for your first ‘payment on account’. Your second ‘payment on account’ is due on 31st July. Also bear in mind that if the deadline is a Bank Holiday or weekend, then your payment must reach HMRC by the last working day before that date.
There is an alternative to these deadlines. You can arrange to pay using a budget payment plan which enables you to make regular payments throughout the year towards your tax bill.
You cannot ever ring up and pay HMRC over the phone. The ways of paying all have different processing times; 5 days, 3 days or the same/next day. It is vital that you account for these timings when you are choosing your method of paying your Self-assessment tax bill.
Many of these payment methods require your 11-character payment reference number. This is your 10-digit Unique Taxpayer Reference number (UTR), with the letter ‘K’ added to the end.
Ways to pay your tax bill
Direct Debit
If you are paying by direct debit for the first time then you need to allow 5 working days for the payment to reach HMRC. You can set this up using your HMRC online account to make single payments. You will need your 11-character payment reference number.
3 days to process – for the organised
Direct Debit
Once you have set up your direct debit, any further payments using the same details should only take three working days. Remember, each time is a single payment.
Cheque in the post
Cheques should be made payable to ‘HM Revenue and Customs only’. You should include an HMRC paying in slip with your cheque, which you can download for payment by cheque. Do not attach the two together or fold them in half.
You should send any cheque to:
HM Revenue and Customs
Bradford
BD98 1YY
BACS
The bank details you need are with the following CHAPS section.
Same day/Next day – for the last minuters!
CHAPS and Online or Telephone Banking (Faster Payments)
You will need your 11-character payment reference number and HMRC’s account number. There are two accounts you could pay into, your bill will tell you which one.
If your bank account is in the UK, then you will pay in to one of these accounts:
HMRC Bank Accounts:
- Account name: HMRC Cumbernauld
Account number: 12001039
Sort Code: 08 32 10
- Account name: HMRC Shipley
Account number: 12001020
Sort code: 08 32 10
If your bank account is outside the UK, then you will need the following account information;
- Account name: HMRC Cumbernauld
Account number/IBAN: GB74CITI08321012001039
Bank Identifier Code (BIC): CITIGB2L
- Account name: HMRC Shipley
Account number: GB05CITI0831012001020
Bank Identifier Code (BIC): CITIGB2L
You will also need to allow more time for the money to reach HMRC’s account if you have a foreign bank account.
Post Office
If you have a paying-in slip from HMRC, then you can pay by cash, cheque or debit card at the Post Office. Cheques should be made payable to ‘Post Office Ltd.’ and you can only pay bills that are under £10,000. Any payments made at the Post Office are accepted by HMRC on the day you make the payment, not when they receive it. If you do not have an HMRC paying-in slip then you cannot use this payment method.
Building Society or Bank
You can only make your tax bill payment at your bank or building society if you have been sent both a paying-in slip and a paper statement by HMRC. Cheques should be made out to ‘HM Revenue and Customs only’ and your Tax reference number.
These types of payments are also accepted on the day you make them, rather than when they arrive in HMRC’s account. You cannot use this form of payment if you do not have the necessary slip.
Debit/Credit Card online payments
There is a new system in place for these types of payments, it is no longer ‘BillPay’.
You use your HMRC online account and your tax reference number to pay. There is a 1.5% non-refundable charge for using a credit card.
As of January 2016, there will be a limit imposed on how many times you can pay tax in a particular time period using a credit/debit card. This is not a set limit that applies across the board, HMRC will look at each case and make a decision based on their definition of ‘reasonable’.
You will only be able to make more than one card payment if they are for different tax bills. (eg Corporation tax, PAYE.) So, if you are unable to pay the full amount by card, you should use another payment method.
Paying tax through a PAYE tax code
You must meet the three following criteria if you want to pay your self-assessment tax bill through your PAYE tax code:
- You are currently paying tax through the PAYE system.
- Your paper tax return was in by 31st October or by 30th December if you submitted online.
- You owe HMRC up to a maximum of £3,000.
HMRC will automatically use PAYE to collect your tax bill if you fit into the above category. In fact, you have to ask them not to do it this way.
You cannot use this method of payment if any of the following apply to you:
- If you would lose half or more of your PAYE income in tax payments.
- If your PAYE income is not enough for HMRC to be collecting any tax.
- If your tax bill would end up double the usual amount.
The additional tax bill payments would be taken off in equal monthly instalments from your pension or salary.
HMRC Budget Payment Plan
You can set up this kind of payment plan using your HMRC online account and it enables you to pay your bill in advance with set instalments. The details can be found in the ‘Direct Debit’ section, under ‘Budget Plan’. You will only be allowed to select this option if all of your Self-Assessment bills have been paid to date. It is a very flexible arrangement where you can choose the amount you want to pay and the frequency (weekly or monthly).
You can take a payment break for up to 6 months. When the self-assessment deadline comes around, if your instalments do not total the whole bill, then you must make a final payment to settle the difference.
Checking on your HMRC payments
If you are sending your payment by post, you can also send a letter asking HMRC for a written receipt. Otherwise, allow 3 to 6 days processing time, and then your online HMRC account should show as ‘paid’.
