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The Ultimate Guide about How to Pay Self-Assessment Tax

Updated: Mar 14

Index

1. Introduction

2. Different Methods of Paying Self-Assessment Tax

3. Through Debit or Credit Card

4. Use of Online Banking

5. Phone Banking

6. From Faster Payment

7. By Bank Giro

8. With CHAPS

9. Pay at the Post Office

10. The Information You Need to have Before Paying Self-Assessment Tax

11. What is the Tax Reference Number?

12. What If You Don’t Have Proof of Payslip?

13. Deadlines for the Tax Payment

14. What Is Payment On Account?

15. What If You Have Never Completed A Self-Assessment Tax Return Before?

16. What Is a Short Tax Return?

17. What Information Do I Need to Complete the Self-Assessment Form?

18. Who Needs to Submit a Self-Assessment Tax?

19. How Long Do You Need To Keep the Financial Record?

20. Can Someone Help Me Fill Out My Tax Return?



 

Introduction

If you are self-employed or have other/multiple sources of income, you will most likely need to file an annual self-assessment tax return. The self-assessment tells HMRC how much money you have earned this year and some other details about your financial situation so that HMRC can calculate the amount of tax and/or national insurance (NI) you owe. This is also called "filing annual tax return" and you usually do it online. The name "self-assessment", should not imply that you have to do it yourself; you can hire an accountant to do it. An accountant can happily fill it out accurately for you and minimize the taxes you have to pay by avoiding any overpaid taxes.


How to Pay Self-Assessment Tax

After filing the tax return, HMRC will calculate the amount of tax due. They will then send you your notice of assessment, which you can view by logging into your account on the government website. You can then pay the self-assessment tax, usually online with a debit card, or Post by using cheque. This guide will remind you of the payment options available for paying taxes. We will see some options that you can use to pay taxes and these are:




Different Methods of Paying Self-Assessment Tax


1. Through Debit or Credit Card

If you have a debit or credit card issued by a UK card issuer, you can pay your self-assessment tax fee online using the “BillPay” service from Santander Corporate Banking. If you choose to pay by credit card, a 1.4% non-refundable transaction fee will be added to the price. All charges below £0.01 are rounded to the nearest penny. BillPay payment takes three working days to reach HMRC. Banking days are Monday to Friday, excluding public holidays.


Pay Self-Assessment Tax Through Debt or Credit Card

2. Use of Online Banking

For the internet banking method, select 'HM Revenue & Customs' from your bank/builder payee list or use your HMRC bank account details to create your own instruction manual. You must also provide the reference number and payment amount, provided by HMRC. If you are using payroll from your bank or mortgage lender, be sure to carefully select the correct HMRC entry for the payment you wish to make.


Pay Self-Assessment Tax Through Online Banking

3. Phone Banking

To opt for the phone banking method, call your bank/builder and give details of your HMRC bank account, self-assessment tax reference and charges to be paid. Before making a payment, you should contact your bank or mortgage company to confirm available services, daily value limits and the latest payment terms.


Pay Self-Assessment Tax Through Phone Banking

4. From Faster Payment

“Faster Payment” is a service introduced by the banking sector to send same-day or next-day payments via the internet or by telephone, provided that the value of the payment does not exceed the limit value set by the issuing bank.


Pay Self-Assessment Tax Through Faster Payment Method

5. By Bank Giro

If your bank or building society offers the By “Bank Giro” service, you can pay for your self-assessment at your bank branch by check or cash. HMRC processes each bank transfer electronically.

If you pay like this:


● Bring your proof of payment from HMRC to your bank branch where you have an account (other banks may refuse or charge you for this service).

● Present your cheque for payment to Queen's Revenue & Customs only and write your self-assessment reference number after HM Revenue & Customs only.


To compensate for any delays in bank processing (for which HMRC is not responsible), please allow at least three working days for the payment to arrive. Working days are Monday to Friday, excluding public holidays. If paying by bank Giro, please only use official proof of payment from HMRC. HMRC payment slips contain correct HMRC bank account information and ensure prompt payment to your account.


Pay Self-Assessment Tax Through Giro Payment Method

6. With CHAPS

This allows you to ask your bank to make a payment that will be received by HMRC the same day, provided you arrange payment within the time frame set by your bank (usually between 9 am and 3 pm). CHAPS payments are more expensive than other payment methods but can be useful if you have to make very large payments.


Pay Self-Assessment Tax Through CHAPS Payment Method

7. Pay at the Post Office

You can pay a self-assessment tax at the post office by cheque, cash, or debit card. HMRC treats each postal payment as an electronic payment.

If you pay like this:

● Bring your proof of payment from HMRC (otherwise you will be charged for using this service)

● Make cheques payable to "Post Office Ltd."


To compensate for any delays in bank processing, please allow at least three working days for the payment to arrive.



Pay Self-Assessment Tax Through Post Office



The Information You Need to have Before Paying Self-Assessment Tax



What is the Tax Reference Number?

When paying for the self-assessment, use the self-assessment tax reference number, also known as the UTR. UTR stands for unique transaction reference number. This is stated on the payment slip sent to you by HMRC and in the reference box. The reference number consists of ten digits followed by the letter “K”, for example, 9876543210K.


What If You Don’t Have Proof of Payslip?

If you are paying for the self-assessment electronically, you do not need a payslip unless you are paying at a bank or post office. HMRC recommends that you make your payments electronically using one of the methods described elsewhere in this guide. Electronic payments are generally more efficient and secure as long as you provide HMRC with an accurate reference number.


However, if you are paying by post and do not have access to the electronic payment receipt sent by HMRC; Instead, you can complete and print a self-assessment receipt yourself. This should be sent to HMRC with payment.


Deadlines for the Tax Payment

The deadline for the payment of the Self-assessment Tax is 31st October if you send your tax returns on paper (by post) or 31st January of the following year if you send your complete tax returns to HMRC using the online method.



What Is Payment On Account?

“Payment On Account” is the tax payment made by taxpayers who undergo a six-monthly self-assessment plan to divide the tax burden for the following year. It is calculated based on the previous year's tax invoice. This means that HMRC predicts your future earnings based on your past earnings. It must be paid in two instalments: the deadlines are January 31 and July 31.


The first payment is due on January 31 of every year and your account will be charged off from the prior year. The second payment is due on July 31 and will be paid before the following year based on the amount you have paid in the past. It's worth having an accountant do them for you for at least the first year to make sure you're paying the right amounts.


What If You Have Never Completed A Self-Assessment Tax Return Before?

If you have not received a tax return but you had income or capital gains, you need to notify HMRC by 5 October following the end of the tax year in which you had the income, or you may face a penalty. HMRC will then send you a tax return to complete.


What Is a Short Tax Return?

If you receive a self-assessed tax return and file it on paper instead of online, but have minor tax issues, you may be able to receive a short tax return form instead of a full self-assessed tax return. This may be the case, for example, if you have employee income from work, self-employment benefits, the income of less than £85,000 (2020/21) and relatively little or low capital income. of property


A short tax return is four pages long and about one-third of the average self-esteem tax return with extra pages.


What Information Do I Need to Complete the Self-Assessment Form?

Make sure that you have:


● Your unique 10-digit tax number (UTR)

● your social security number

● Information on tax-free income for the fiscal year

● Any charitable contribution or pension that qualifies for tax relief

● P60 or other documents that certify how much income you have received and on which you have already paid taxes.


Who Needs to Submit a Self-Assessment Tax?

If you are earning a salary paid through the PAYE system or earning retirement income only, you do not need to submit your tax return as a starting point, as your income tax has already been withheld at the source.


Below are some examples of individuals who should normally pay this tax.


● Independent

● people with more than one job

● Individuals who are receiving a pension while continuing to work and earn a living

● Managing Directors and Shareholders of Public Companies

● Anyone who earns a certain amount of money from investments (including real estate).

● Ministers of religion

● People who apply for family benefits and earn more than a certain amount

● Anyone who receives a P800 form (this is from HMRC saying they haven't paid enough tax)


To be sure if you are required or not to pay Self-Assessment Tax, you need to check it from the Free Tool offered by the government.


How Long Do You Need To Keep the Financial Record?

Individuals in self-assessment are required by law to retain financial records for a specified period of time. When HMRC examines your tax return, you may be asked to look at some of your paperwork. You can keep the records on paper or digitally. HMRC can fine you if your records are incomplete and inaccurate. If you report your taxes on time, you must keep your records for at least 22 months after the end of the tax year, unless you are self-employed.


However, the normal rule for self-employed people and renters is to retain employment records for at least five years after the January 31 application deadline. For example, tax returns 2021/22 must be kept until January 31, 2027.



Can Someone Help Me Fill Out My Tax Return?

Self-assessment is easy if your financial matters are simple and you know what you are doing. However, this can take some time and you may be paying more tax than necessary if you are unsure of the costs and benefits you can claim. At worst, errors can lead to penalties. Hence, with more complex accounts, it is often a good idea to hire an accountant to do your taxes. In fact, the cost of hiring an accountant, which can improve value for money, is itself a tax-deductible expense.


Pro Tax Accountants has a team of professionals ready to help you with your Self-Assessment Tax. Contact us now!


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