Paying tax in the UK might seem confusing. However, once you know how payments work and how you can work out what to pay, the whole process becomes a lot easier. Here's everything you need to know about paying your tax.
Who Needs to Pay Tax in the UK?
Everyone in the UK who earns money in the UK will have to pay some tax. How you pay typically depends on the income type and residency status. You have to pay tax in the UK if you:
If you live in the UK for 183 days or more in a tax year, you're considered a UK resident for tax purposes and have to declare your income to HMRC. Non-residents usually only have to pay tax on income if it's earned inside the UK, like rent from property or local business profits. All taxes are collected by HM Revenue & Customs (HMRC), which uses your National Insurance number and, for self-employed workers, a Unique Taxpayer Reference (UTR) to track payments.
How Employees Pay Tax (PAYE System)
For those employed in the UK, income tax is handled automatically through the PAYE (Pay As You Earn) system. This is how most workers pay tax and National Insurance without needing to file a tax return.
Using your tax code from HMRC, your employer calculates how much tax to deduct as you're paid. This amount is calculated based on salary, personal allowance, and any other adjustments or benefits. These will all be shown on your payslip, including:
Typically, PAYE gets things right if you only have one job. However, if you change jobs, start receiving a pension, or have multiple incomes, it's worth ensuring your tax code is correct. You can do this through your Personal Tax Account on GOV.UK. If HMRC finds that you’ve paid too much or too little tax, they’ll adjust your tax code or issue a P800 tax calculation at the end of the year to correct it. There are three main ways to pay tax in the UK, depending on how you earn your income:
PAYE (Pay As You Earn)
If you’re employed, your income tax and National Insurance are automatically deducted by your employer each time you’re paid.
Self Assessment
If you’re self-employed, freelance, or have additional income (like rent or dividends), you must file an annual Self Assessment return and pay any tax due directly to HMRC.
Other Income
Income from savings, property, or investments is also reported through Self Assessment, but it may qualify for specific allowances such as the Personal Savings Allowance or Property Income Allowance.
How the Self-Employed Pay Tax (Self Assessment)
Those who are self-employed or run their own business have to declare and pay their own tax through the Self Assessment system. This means that HMRC doesn't automatically deduct tax. This means you have to tell HMRC what you earn.
Registering for Self Assessment
You must register with HMRC when you start working for yourself. Once registered, HMRC will send you a Unique Taxpayer Reference (UTR) and login details for your Government Gateway account. You’ll use these each time you file your tax return or make a payment.
Filing and Payment Deadlines
31 October
Paper tax return deadline (previous tax year)
31 January
Online tax return and payment deadline
31 July
Second Payment on Account (for some taxpayers)
If you’re self-employed, you’ll pay both Income Tax and Class 4 National Insurance on your profits (after deducting allowable expenses such as materials, subscriptions, or travel costs).
How to Pay
You can pay your Self Assessment bill:
| Who Pays Tax | How Tax Is Paid | When Payment Happens |
|---|---|---|
| Employed (PAYE) | Automatically deducted by employer through PAYE, using your HMRC tax code. | Every payday (monthly or weekly). |
| Self-Employed | Through a Self Assessment tax return; you calculate and pay Income Tax and National Insurance yourself. | 31 January (main deadline) and 31 July (second Payment on Account, if applicable). |
| Other Income (property, savings, dividends) | Declared via Self Assessment or deducted automatically for certain accounts. | By 31 January following the tax year end. |
Paying Tax on Other Income
You may earn from a source other than regular employment or self-employment. In the UK, the way you pay taxes on other income depends on the amount and its origin. Common types of other income include property, dividends, savings, or capital gains.
Rental Income
If you earn income from letting out property, you'll need to report it through a Self Assessment tax return. You can usually deduct expenses such as maintenance, repairs, letting fees, and mortgage interest (for some landlords). There's also a Property Income Allowance of £1,000 per year. If your rental income is below that, you don't need to report or pay tax on it.
Dividends
If you own shares in a company, you may receive dividend income. In 2025/26, the Dividend Allowance is £500. Dividends above that allowance are taxed at:
Savings Interest
Most people don’t pay tax on small amounts of savings interest thanks to the Personal Savings Allowance:
Capital Gains
If you sell investments, property, or valuable items and make a profit, you may owe Capital Gains Tax (CGT). For 2025/26, the annual exempt amount is £3,000, and the standard rate for gains is 10% (basic rate) or 20% (higher rate). Residential property gains are taxed at 18% or 24% depending on your income band. Each type of income is declared separately on your Self Assessment return, and you pay any tax due by the 31 January deadline following the end of the tax year.
Ways to Pay Your Tax Bill
Once you've calculated how much tax you have to pay, there are several ways to pay HMRC. The methods you can use will depend on whether you're paying Self Assessment, PAYE adjustments, or other taxes like Capital Gains or Corporation Tax.
Personal credit cards are not accepted.
Always include your correct payment reference to avoid delays.
Some banks and building societies can make payments directly to HMRC at the counter. Take your HMRC payslip to ensure your payment is allocated correctly.
Checklist: What You Need Before Paying Tax Online
To pay your tax, make sure you have all your details ready. If you make a mistake, it could cause your tax to be credited to the wrong account. Follow this checklist.
Personal Details
- Full name and address (must match your HMRC account)
- Your National Insurance number
- Your Unique Taxpayer Reference (UTR) if you’re self-employed
Payment Information
- The amount you need to pay
- The tax type (e.g. Self Assessment, PAYE, Capital Gains, or Corporation Tax)
- Your payment reference (UTR + “K” for Self Assessment)
- Your bank or card details (debit or corporate credit only)
Online Account Access
- A registered Government Gateway ID and password
- Access to your HMRC Personal Tax Account or Self Assessment portal
- Any security codes for two-step verification
Other Useful Documents
- A recent payslip, P60, or P45 (for employed taxpayers)
- Copies of previous Self Assessment confirmations
- Any correspondence from HMRC about owed tax or deadlines
Timeline: Key Payment Deadlines in the UK
Though the tax year runs from 6 April to 5 April, deadlines will depend on how you earn. Remember that there are penalties for missing these dates, so make a note of them. Getting your taxes sorted in a timely fashion is always recommended.
Self Assessment Deadlines
TIMELINE BLOCK:
6 April 2025
Start of 2025/26 Tax Year
The new tax year officially begins.
31 October 2025
Paper Tax Return Deadline
Deadline to file a paper Self Assessment return for the 2024/25 tax year.
31 January 2026
Online Tax Return and Payment Deadline
Submit your online Self Assessment return and pay any outstanding tax for 2024/25.
31 July 2026
Second Payment on Account
For taxpayers making advance payments, this is the due date for your second instalment.
60 Days After Property Sale
Capital Gains Tax Payment
If you sell a residential property, you must report and pay any Capital Gains Tax within 60 days.
9 Months + 1 Day After Year-End
Corporation Tax Payment
Companies must pay their Corporation Tax within 9 months and 1 day of the end of their accounting period.
PAYE Adjustments
If you’re employed and HMRC finds you’ve underpaid or overpaid tax, adjustments are usually made automatically in your next tax code. However, if you need to make a manual payment, HMRC will provide a separate due date on your letter or online account.
Other Taxes and Contributions
To stay organised, set up email or text reminders through your HMRC account, or add key dates to your digital calendar at the start of each financial year.
What Happens If You Miss a Payment?
Late payments to HMRC can result in interest, penalties, or both. It's just recommended that you pay in full and on time.
Penalties for Late Self-Assessment Payments
If You Can’t Pay in Full
If you're struggling to pay, contact HMRC as soon as possible to arrange a Time to Pay agreement. This allows you to spread your bill over several months with manageable instalments. You can usually apply online if you owe less than £30,000 and your return is up to date.
Other Tax Types
For other taxes (such as VAT or Corporation Tax), penalties vary, but the general rule is the same; late or missed payments accumulate both interest and surcharges. Council tax is handled separately by your local authority, which may issue reminders, final notices, or pass the debt to enforcement if it remains unpaid.
How to Avoid Penalties
Missing a deadline doesn't have to become a significant issue; the key is to contact HMRC early and make a plan before penalties escalate.
If you're struggling to pay your tax bill, don't ignore it — contact HMRC as soon as possible. You may qualify for a Time to Pay arrangement, which allows you to spread your bill across manageable monthly instalments.
- You can usually apply online if you owe less than £30,000 and your tax return is up to date.
- Interest still applies, but penalties are avoided once an agreement is in place.
- If you owe more than £30,000 or need longer to pay, call the HMRC Payment Support Service directly.
Tools and Links to Help You Pay Tax Online
HMRC has multiple ways to pay your tax. These work for PAYE (checking your balance) and Self Assessment (making payments), confirming a payment, and other related tasks. Use these to stay organised and on top of your taxes.
HMRC Payment Portal
The easiest way to pay most taxes online is through the official GOV.UK payment portal. You can make secure payments via debit card, corporate credit card, bank transfer, or Direct Debit. Always start from a GOV.UK domain. Never click payment links in emails or texts.
Personal Tax Account
Your Personal Tax Account lets you check your current and past income, see how much tax you’ve paid, and confirm if HMRC has received your most recent payments. You can also update your details or view correspondence directly from your dashboard.
Self Assessment Online Service
If you’re self-employed or need to declare additional income, you can file and pay your Self Assessment online. The service automatically calculates what you owe and provides a confirmation when your payment is processed.
Additional Online Tools
- Council Tax Checker: Verify your local council band and find contact details for payments.
- Tax Calculator: Estimate your income tax and National Insurance in minutes.
- Payment Plan Estimator: See how monthly instalments would work under HMRC’s Time to Pay scheme.
Tips for Managing Tax Payments Efficiently
With organisation and the right tools, it's easy to stay on top of your payments, avoid penalties, and keep clear records. Paying tax needn't be stressful. Here are our recommendations:
References
- GOV.UK – Income Tax: introduction https://www.gov.uk/income-tax
- GOV.UK – Tax on foreign income https://www.gov.uk/tax-foreign-income
- GOV.UK – National Insurance: introduction https://www.gov.uk/national-insurance
- GOV.UK – Self Assessment tax returns https://www.gov.uk/self-assessment-tax-returns
- GOV.UK – PAYE: detailed information https://www.gov.uk/government/collections/paye-detailed-information
- GOV.UK – Check your Income Tax for the current year https://www.gov.uk/check-income-tax-current-year
- GOV.UK – Tax codes https://www.gov.uk/tax-codes
- GOV.UK – Check how to register for Self Assessment https://www.gov.uk/register-for-self-assessment
- GOV.UK – Pay your Self Assessment tax bill https://www.gov.uk/pay-self-assessment-tax-bill
- GOV.UK – Tax-free allowances on property and trading income https://www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income
- GOV.UK – Tax on dividends https://www.gov.uk/tax-on-dividends
- GOV.UK – Tax on savings interest https://www.gov.uk/apply-tax-free-interest-on-savings
- GOV.UK – Paying HMRC: detailed information https://www.gov.uk/government/collections/paying-hmrc-detailed-information
- GOV.UK – Personal tax account: sign in or set up https://www.gov.uk/personal-tax-account
- GOV.UK – HMRC online services: sign in or set up an account https://www.gov.uk/log-in-register-hmrc-online-services
- GOV.UK – Avoid and report internet scams and phishing https://www.gov.uk/report-suspicious-emails-websites-phishing
- GOV.UK – Capital Gains Tax: what you pay it on, rates and allowances https://www.gov.uk/capital-gains-tax
- GOV.UK – Corporation Tax https://www.gov.uk/corporation-tax
- GOV.UK – If you cannot pay your tax bill on time https://www.gov.uk/difficulties-paying-hmrc
- GOV.UK – Pay Council Tax arrears https://www.gov.uk/council-tax-arrears
- GOV.UK – Check your Council Tax band https://www.gov.uk/council-tax-bands
- GOV.UK – PAYE Tax Calculator https://www.tax.service.gov.uk/estimate-paye-take-home-pay/your-pay
- GOV.UK – Business records if you're self-employed https://www.gov.uk/self-employed-records
Enjoyed this article? Leave a rating!
Loading...
