How do I pay my self-assessment tax bill?
Welcome to AO Accountants, your trusted partners in navigating the intricacies of business finances, tailored especially for the creative industry in the UK. In this blog, we will be covering the commonly asked question: How do I pay my self-assessment tax bill? We’ll delve into the essential aspects of paying your self-assessment tax bill, ensuring a seamless process and financial compliance for the upcoming tax year.
Understanding Your Self-Assessment Tax Bill
As a self-employed creative entrepreneur, managing your finances involves a crucial step: paying your self-assessment tax bill. If you’re self-employed and earn over the personal allowance after expenses, it’s likely you will need to pay self-assessment tax.
Importance of Self-Assessment
Understanding the significance of your self-assessment tax bill is the first step. This annual obligation ensures compliance with HMRC regulations.
Payment Methods and Options
HMRC provides various avenues for settling your self-assessment tax bill, offering flexibility to suit your preferences and circumstances.
Using Your Government Gateway Online Tax Account
Explore the convenience of your Government Gateway online tax account for a straightforward and secure payment process.
Pay by Faster Payments, CHAPS or Bacs
Opt for a direct bank transfer using the BACS payment system, ensuring a swift and efficient transaction.
Account details to use
Pay into the following account:
- sort code – 08 32 10
- account number – 12001039
- account name – HMRC Cumbernauld
You’ll need to use your 11-character payment reference when you pay. This is your 10-digit Unique Taxpayer Reference (UTR) followed by the letter ‘K’.
Streamline your payments with the Direct Debit option, providing a hassle-free and automated solution.
Online Card or Credit Card Payments
You are able to make payment online using your card or credit card, without having to login to your government gateway account, ensuring a secure and quick transaction.
Including Your UTR Number
When making online payments, include your Unique Taxpayer Reference (UTR) number to facilitate accurate allocation by HMRC. Your UTR number can typically be found on any correspondence sent to you by HMRC under the ‘reference’
Deadline for Self-Assessment Payment
Although the tax year concludes on April 5th, self-assessment payments are typically due by midnight on January 31st of the following year.
Penalties for Late Submissions and Payments
Penalties for late submission of self-assessment tax returns are outlined as follows:
- One day late: A fixed penalty of £100 applies, irrespective of whether any tax is due or has been paid on time.
- Three months late: Incurs a daily penalty of £10, reaching a maximum of £900 for 90 days.
- Six months late: Results in a penalty of £300 or 5% of the tax due, whichever is higher.
- Twelve months late: Imposes a penalty of £300 or 5% of the tax due, whichever is higher. Additional penalties may be applicable for deliberate or concealed withholding of information after more than 12 months.
Late payment of tax attracts penalties according to the following structure:
- 30 days late: Incurs a penalty of 5% of the tax due.
- Over five months after the first penalty: Results in a penalty of 5% of the outstanding tax due at that date.
- Over 11 months after the first penalty: Imposes a penalty of 5% of the outstanding tax due at that date.
You can use HMRC’s calculator to estimate how much your late payment penalty will be.
Payments on Account
Payments on Account: Should your Self-Assessment tax bill surpass £1,000, you might need to make advance payments for the subsequent year’s tax bill. These payments, referred to as payments on account, consist of two instalments. The initial instalment, due concurrently with your current year’s bill, will amount to half of the total of last years tax bill.
Assistance in Difficult Times
Facing challenges in settling your self-assessment tax bill? AO Accountants encourages you to contact HMRC promptly to discuss a Time to Pay agreement, allowing for a tailored approach to manageable repayments.