Hero image for How to Pay Self Assessment Tax

How to Pay Self Assessment Tax

Unsure how to pay Self Assessment tax? Find out how, who pays Self Assessment tax and what the deadlines are in this easy guide.

6 min read

Does the thought of tackling your Self Assessment tax return and meeting the 31 January deadline fill you with dread? Well don’t panic. Here are our top tips for getting you through this confusing time, as well as some answers to all your burning Self Assessment questions, like how to pay Self Assessment tax (spoiler: you can pay Self Assessment tax online or via the post, whichever you prefer).

Start with the basics: what is Self Assessment tax?

Self Assessment tax is one system that Her Majesty’s Revenue & Customs (HMRC) uses to collect UK Income Tax and National Insurance. If you are an employee, tax is usually deducted automatically from your wages, pensions and savings. But if you have income from freelance or self-employed work – or even just a side-hustle– you need to report it yourself in a Self Assessment tax return. You can submit this to HMRC online or by post.

Who pays Self Assessment tax?

According to HMRC’s website, you must send a tax return if, in the last tax year, you were:

  • Self-employed as a sole trader and earned more than £1,000

  • A partner in a business partnership.

You may also need to send in a Self Assessment tax return if you have any other untaxed income, such as:

  • Money from renting out a property

  • Tips and commissions

  • Income from savings, investments and dividends

  • Foreign income

11.7 million people were required to complete a Self Assessment return for the 2018/19 tax year.

What do you need to complete a tax return?

As well as supplying details about your income, you may need to include other financial information including:

  • Charitable donations that are eligible for tax relief

  • Your P60

  • Your 10-digit Unique Taxpayer Reference

  • Your National Insurance number

  • Records of any expenses related to self-employment

  • Details about your untaxed income from self-employment, dividends and interest on shares

Make sure you get hold of this information in good time rather than waiting until the end of January to dig it out.

What is the Self Assessment tax return deadline?

These are the deadlines for a submission to HMRC:

  • 31 October for postal submissions

  • 31 January for online submissions

The UK tax year runs from 6 April to 5 April the following year. So, for example, the 2019/20 tax year covered the period from 6 April 2019 to 5 April 2020. This means the postal deadline was 31 October 2020 and the online deadline is 31 January 2021.

Late submissions result in a fine of £100 if your return is up to three months late. After that you will begin to incur additional charges.

However it’s important to remember that 31 January isn’t just the deadline for completing your return - it’s also generally the date you have to make your first payment to HMRC. The following payment (on account) is usually due on 31 July. 

COVID-19 deferrals

This year was possible to defer the payments that were due in July 2020 and those that will be due in January 2021 until January 2022. This is part of the government's Time to Pay arrangements, which recognise the impact of COVID-19 on self-employed people. It’s also possible to pay the tax you owe in instalments. See the government website for more details. 

Don't get caught out

Avoid paying penalties and stay on the right side of HMRC. Find out how QuickBooks keeps you compliant.

Discover QuickBooks today
QuickBooks screenshot

How to register for the Self Assessment

You can register for the Self Assessment online. However, before you can register you’ll need a Government Gateway account.

Once that’s set up and you’ve registered, HMRC will send you a 10-digit Unique Taxpayer Reference (UTR) number, to be used on all correspondence and on your tax return. HMRC should also provide you with an ID and password to access the system.

The password will be sent electronically by HMRC, so remember to make a note of it. However, HMRC delivers the user ID by post which could take anywhere from a few days to a few weeks. You’ll need to make sure you leave enough time to allow for any postal delays.

When should you begin your Self Assessment tax return?

The sooner the better.

While it’s tempting to leave things to the last minute, the sooner you start thinking about preparing your tax return, the more relaxed you’ll be when the deadline hits.

Register for Self Assessment now if you haven’t done so already and make sure you are storing all of your client invoices, business-related receipts and bank statements safely. You might choose to keep paper copies, but these can get damaged or lost. Digital storage is the safest option. It also takes up less space and can help you stay organised, especially if you use an accounting software like QuickBooks. With all your records stored safely throughout the year, you’ll have much less to do when it comes time to complete your Self Assessment tax return.

Be prepared to pay extra for your first payment

The first time you submit a tax return, you have to pay any tax due from the previous tax year, as well as half as a half of the tax you expect to pay this tax year. So, effectively you pay 150% of the tax.

You’ll then make a second payment on account by 31 July. Once you are in the payment on account system you’ll only have to make the January and July payments.

This year though things are a little different. As part of the government's Winter Economy Plan - payments due in January 2021 can be deferred until 2022. 

Self Assessment returns will still be due at the usual time- but preparing yours doesn’t have to be a headache. Using software like QuickBooks can make it simple. It automatically tracks your business mileage and reconciles all your expense receipts with a click of your phone camera.

Want to get an idea of how much tax you’ll owe this year? Try our new Self Assessment tax calculator.

Choose Self Employed tax software

Online Self Assessment has made the process much easier for most people. But that’s just the first step towards an effortless tax return. When all of your records are stored and organised throughout the year using cloud-based software, that January deadline becomes a lot less daunting. All the information you need is already there, in one place, ready for HMRC. No more searching for missing invoices or receipts. 

QuickBooks’ cloud-based self employed tax software works on PCs, Macs and mobile devices, so you can access your accounts anytime and contact our chat support wherever you are. And if you need any technical help you can call our award-winning customer success team or chat to them online.

If it all still feels a bit daunting, you can get expert advice from a QuickBooks certified accountant listed in our ProAdvisor Directory.

Found this article about how to pay Self Assessment tax useful? Using software like QuickBooks is a great way to make sure all your accounts are in order and you’re ready for tax time. And we can also help keep track of the tax you owe, so there are no surprises at Self Assessment time.

Discover QuickBooks online accounting today.