Tax is unavoidable. We know we must pay our taxes but how we pay isn't necessarily straightforward
There are a few ways you can pay your tax bill but, as you may have found, the rules are complex and subject to change. For anyone who owes tax outside of PAYE, it can be confusing.
Here's a guide to the ins and outs of paying your tax bill:
Pay your tax bill online
The main solution for many is going to be an online payment via HMRC's online payment system. You'll need your UTR (Unique Tax Reference) code to ensure the payment is allocated to your HMRC account. The whole amount must be paid at once, from the same card, specified for a particular type of tax (such as income or capital gains); otherwise it won't be processed.
Frustratingly, there are limits on how many times you can spend on the same card in one year. The guidelines for this rely on "a view of what's reasonable based on card payment industry standards". It's worth noting that personal credit cards ceased to be acceptable from January 2018.
For self-employed individuals, sole traders, or those with non-PAYE income, GoSimpleTax provides direct self assessment filing with HMRC, offering helpful hints and savings tips throughout the process. Let GoSimpleTax handle all calculations, saving you ££’s in accountancy fees.
Paying tax by cheque
Traditional methods still exist, such as a cheque made out to "Her Majesty's Revenue & Customs only" (followed by your UTR). Any deadlines are counted as the date of receipt, so leave at least three working days for delivery and get proof of postage.
To make the cheque valid, you'll have to pair it with a special pay-in slip, which can be printed here; make sure the two aren't stapled together or folded up.
Pay HMRC via a bank
You can no longer pay your bill using a Post Office payment. Banks, though, are still classed as a valid payment station: you can walk up and pay your tax bill over the counter.
To do so, ensure you have paper statements from HMRC regarding what's owed. Then follow the steps above to pay by cheque. This is a good option if you are paying close to the deadline - the government will count the day you paid as the day received, even if it doesn't hit their account for a while.
Pay HMRC by direct debit
The easiest way might be a direct debit agreement, timed on or before the two tax deadlines (31st January and July 31st). The first payment will take five working days to process, but any others should cut that down to three, as your details are added to the database.
There's also scope for phone payments too.
However you pay, just remember to check that your tax bill is correct before you make the payment. Make sure you also allow sufficient time for the payment to clear as you may have to pay a penalty if it is late.
Help is available if you are unable to pay your tax bill on time.
Written by Mike Parkes, technical director, GoSimpleTax.