How to pay Self Assessment tax – 8 top tips

Unsure about how to pay self-assessment tax? Find out how to get ready, who’s affected and what the deadlines are in this easy guide.

5 min read

Does the thought of tackling your Self Assessment before the 31 January deadline fill you with dread? Well don’t panic. Here are our top tips for getting you through this busy time.

1. What is Self Assessment?

Self Assessment tax is one system that HM Revenue & Customs (HMRC) uses to collect UK income tax and national insurance. Tax is usually deducted automatically from wages, pensions and savings. But if you have income from freelance or self-employed work, you must report it yourself in a tax return. You can submit this to HMRC in one of two ways - filed online or sent by post.

2. Do you need to submit a Self Assessment tax return?

According to the HMRC 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 need to send one if you have any other untaxed income, such as:

  • money from renting out a property

  • tips and commission

  • income from savings, investments and dividends

  • foreign income

  • bank interest (certificate of interest and tax paid by your bank)

  • self-employed income (accounts of your business)

  • pension contributions (your bank statement, statement from pension provider)

However, if your only income is from your wages or pension then relax, you won’t need to complete a Self Assessment.

3. Make sure you have all the right financial information to hand

As well as supplying the information listed above in tip 2, you may need to include other financial information like:

  • charitable donations (your bank statement)

  • salary and benefits in kind (P60 and P11d)

If you know you need this data, it’s better to request it in good time rather than at the very end of January.

4. Make a note of the Self Assessment deadline

The UK tax year runs from 6 April to 5 April the following year. And these are the tax return deadlines:

  • 31 October for postal submissions

  • 31 January for online submissions

Let’s take the 2018/19 tax year as an example. It covers the period from 6 April 2018 to 5 April 2019. So the postal deadline is 31 October 2019 and the online deadline is 31 January 2020.

Choosing the online deadline gives you more time to get ready, which is why it has become so popular.

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

5. Make sure you’re registered for Self Assessment in time

Before you can register for Self Assessment you’ll need a Government Gateway account. You can easily create a Government Gateway account online.

Once that’s set up, you’ll need to register with HMRC for Self Assessment. HMRC will then send you a 10-digit Unique Taxpayer Reference (UTR) number, to be used on all correspondence and on your tax return. Once registered, HMRC should also provide you with an ID and password to access the system. HMRC sends this password electronically, so you’ll need to make a note of this.

But be warned. HMRC delivers the user ID by post. Waiting for this to arrive could take anything from a few days to a few weeks. So make sure you leave enough time to allow for this delay. You don’t want it to be the cause of missing the 31 January midnight tax-return deadline. If you do miss the deadline, you’ll get a late-filing penalty of £100, which will rise if your return is more than three months late.

6. Start as early as possible

While it’s often human nature 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. Make sure you have all client invoices, business-related purchase receipts and bank statements to hand too so that you can submit your Self Assessment tax return ahead of the deadline.

Sorting out your Self Assessment doesn’t have to be a headache. Following these guidelines will help a lot, but using software like QuickBooks is also a great idea, saving time, effort and stress.

7. Be prepared to pay extra for your first payment

The first time you submit a tax return, you may get a nasty surprise. You not only have to pay any tax due for the previous tax year, but also a further 50% as a payment on account for the next year. So, effectively you pay 150% of the tax.

You make a second payment on account by 31 July and once you are in the payment on account system everything settles down with regular January and July payments. However, the first year can be a nasty surprise, so watch out!

One way to avoid any surprises is to always know what tax you owe on your earnings and keep it aside. You can do this on a spreadsheet, or if you don’t feel confident with the sums, software like QuickBooks can do that for you automatically.

8. Get help when you need it

Our cloud-based software works on PC, Mac and across mobile devices. That means you can not only access your accounts at any time, you can also ask us for help using our chat support whenever and wherever you are. Or, if you prefer, you can call our award-winning Customer Success Team.

Found this article about how to pay self-assessment tax useful? Using software like QuickBooks is a great way to make sure 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