A Step-by-Step Guide to Deadlines, Penalties, Interest and Payment Options
If you complete a UK Self Assessment tax return, you are responsible for paying any tax owed to HM Revenue & Customs (HMRC) by the required deadlines. Paying late or using the wrong payment reference can result in penalties, interest charges, and unnecessary correspondence from HMRC.
This guide explains how to pay your Self Assessment tax bill, the deadlines involved, the payment methods available, and what to do if you cannot pay in full.
What Is Self Assessment?
Self Assessment is the system HMRC uses to collect Income Tax where it is not fully deducted at source through PAYE.
You will usually need to file a Self Assessment tax return and make a tax payment if you are:
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- Self-employed or a sole trader
- A landlord receiving rental income
- A partner in a partnership
- A company director with untaxed income
- Receiving foreign income, dividends, or capital gains
- Earning over £100,000 per year
- If you had to pay the High Income Child Benefit Charge and do not pay it through PAYE.
- Once your return has been submitted, HMRC calculates how much tax is due, but it is your responsibility to ensure payment is made on time.
Not sure if Self Assessment applies to you?
Many taxpayers file unnecessarily or miss obligations without realising.
Self Assessment Tax Deadlines
Self Assessment deadlines are fixed and enforced strictly by HMRC.
Official guidance:
https://www.gov.uk/self-assessment-tax-returns/deadlines
Key dates to remember:
- 31 October – deadline for paper tax returns
- 31 January – deadline for online tax returns
- 31 January – deadline for paying any tax owed for the previous tax year and the first payment on account
- 31 July – deadline for the second payment on account
Missing a payment deadline will trigger penalties and interest, even if your tax return was filed on time.
Worried about missing a deadline?
We offer ongoing compliance support and deadline reminders to keep you on track.
Understanding Your Self Assessment Tax Bill
Your Self Assessment statement may include more than one amount.
A balancing payment is the remaining tax owed for the previous tax year after taking into account PAYE deductions and any payments on account already made.
You may also be required to make payments on account, which are advance payments towards the following tax year’s bill.
Official guidance on payments on account:
https://www.gov.uk/understand-self-assessment-bill/payments-on-account
Payments on account usually apply if your tax bill is more than £1,000 and:
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- Are split into two equal instalments
- Are due on 31 January and 31 July
- Are based on your previous year’s tax liability
If your income has reduced, you may apply to reduce your payments on account, but reducing them too far can lead to interest being charged later.
Large January tax bills affecting your cash flow?
We help clients forecast liabilities and manage payments on account safely.
Large January tax bills affecting your cash flow?
We help clients forecast liabilities and manage payments on account safely.
How to Pay Your Self Assessment Tax Bill
HMRC provides several approved payment methods for Self Assessment tax.
The main payment page is available at:
https://www.gov.uk/pay-self-assessment-tax-bill
Online or Telephone Banking
Paying by Faster Payments, Bacs or CHAPS through online or telephone banking is one of the most reliable methods.
HMRC bank details:
https://www.gov.uk/pay-self-assessment-tax-bill/bank-details
When making a payment, you must use your 10-digit Unique Taxpayer Reference (UTR) followed by the letter “K” as the payment reference so HMRC can allocate the payment correctly.
Debit or Corporate Credit Card
You can pay online using a debit card or corporate credit card through HMRC’s secure payment service:
https://www.gov.uk/pay-self-assessment-tax-bill/debit-credit-card
Personal credit cards are not accepted for Self Assessment payments.
Direct Debit
Direct Debit payments can be set up through your HMRC online account:
https://www.gov.uk/pay-self-assessment-tax-bill/direct-debit
This option must be arranged in advance and is not suitable for last-minute payments.
Budget Payment Plan
HMRC offers a Budget Payment Plan that allows you to make regular weekly or monthly payments towards your Self Assessment tax bill:
https://www.gov.uk/pay-self-assessment-tax-bill/pay-weekly-monthly
This can help spread the cost and avoid large lump-sum payments in January.
Paying by Cheque
You can also pay by cheque, although this method is slower and requires additional time for postal delivery:
https://www.gov.uk/pay-self-assessment-tax-bill/cheque.
Unsure which payment method to use?
Incorrect references or late payments can cause penalties.
Penalties for Late Payment
If you do not pay your Self Assessment tax by the deadline, HMRC applies late payment penalties automatically.
Official penalties guidance:
https://www.gov.uk/self-assessment-tax-returns/penalties
Late payment penalties are charged as follows:
- 5% of the unpaid tax after 30 days
- An additional 5% after 6 months
- A further 5% after 12 months
These penalties apply even if your tax return was filed on time.
Interest on Late Self Assessment Tax Payments
In addition to penalties, HMRC charges interest on any tax paid late.
Official guidance:
https://www.gov.uk/interest-on-underpaid-tax
Interest:
- Accrues daily
- Starts from the day after the payment deadline
- Continues until the tax is paid in full
- Applies even if you have agreed a payment plan
Already missed a payment deadline?
Early action can limit penalties and escalation.
Time to Pay Arrangements
If you cannot afford to pay your Self Assessment tax bill in full, HMRC may allow you to spread the cost using a Time to Pay arrangement.
Official guidance:
https://www.gov.uk/difficulties-paying-hmrc
A Time to Pay arrangement allows you to:
- Pay tax in instalments
- Manage short-term cash-flow difficulties
- Reduce the risk of enforcement action
Interest will still apply, and approval depends on your circumstances and compliance history.
Struggling to pay your tax bill in full?
We can help you negotiate a Time to Pay arrangement with HMRC.
Reducing Payments on Account
If your income has fallen significantly, you can apply to reduce your payments on account.
Official guidance:
https://www.gov.uk/understand-self-assessment-bill/payments-on-account/reduce
Care should be taken when doing so, as:
- Reducing payments too far can result in interest
- HMRC may challenge unjustified reductions
- A higher balancing payment may still be due later
Considering reducing your payments on account?
Professional advice can prevent costly mistakes.
Keeping Records and Proof of Payment
HMRC requires you to keep Self Assessment records for at least five years after the 31 January deadline.
Official guidance:
https://www.gov.uk/self-employed-records
You should keep:
- Payment confirmations
- Bank statements
- Tax calculations
- HMRC correspondence
Good record-keeping helps resolve queries quickly and reduces the risk of HMRC enquiries.
Take Control of Your Self Assessment Today
Whether you need help calculating your tax, managing payments, avoiding penalties, or dealing with HMRC, professional support can save time, stress, and money.
