Personal Tax
The easiest and quickest way to pay your personal self-assessment tax is using the HMRC payment portal.
Once you're registered, all you'll need is your UTR, the amount you want to pay and your card details (you can't use a credit card).
You could also pay using the following alternative methods:
You could make a bank transfer to HMRC via internet or telephone banking using your UTR as the reference.
Account name [HMRC Cumbernauld]
Account number [12001039]
Sort code [08 32 10]
As most people only pay self assessment tax twice a year, direct debit doesn't save much time and you'll have to let HRMC know how much to take each time so we wouldn't recommend using this option.
In some circumstances, you can also choose to change your current tax code and pay your self-assessment tax through your PAYE job. This is only available if your bill is less than £3,000, you have significant PAYE income and you submit your tax return prior to the end of December.
Self-assessment tax is a personal tax, so it shouldn't be paid with a business account.
Do I need to pay?
You'll probably need to pay self assessment tax if you've earned more than the personal allowance (£12,500 in 2019/20) and you've:
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Been self employed during the year;
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Received dividend income;
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Received property income;
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Received significant amounts of investment income (>£1,000);
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Received any other untaxed income.
When do I need to pay?
Self-assessment can be paid in 3 ways:
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If it's your first return or your tax bill is usually less than £1,000, you might be able to pay off your tax in one lump sum any time between the end of the tax year and the end of the following January.
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If your tax bill is regularly more than £1,000, you'll probably need to make payments on account. This means that you'll pay half of the estimated tax bill by the end of January during the tax year, the other half of the estimation by the end of the next July and any difference between what's been paid and the actual tax liability by the end of the following January.
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You could also set up a budget payment plan where you pay more frequently through the year in order to avoid paying large lump sums.
What happens if I don't pay
Assuming you have submitted your tax return on time but haven't paid the tax by the end of January after the tax year HMRC will start to charge interest on a daily basis.
If you haven't paid by March 1st , HMRC will charge an extra 5% of your tax bill and continue to add daily interest.
If you haven't paid by August 1st , HMRC will charge another 5% of your tax bill and continue to add daily interest.
If you haven't submitted your tax return either, the charges will be significantly increased including a £100 charge if you haven't filed it by the end of January after the tax year, £10 daily fine from 1st May up to a maximum of £900 and then a £300 fine 1st August or 5% of your tax bill (whichever is greater).
Corporation Tax
The easiest and quickest way to pay corporation tax is using the HMRC payment portal.
All you'll need is the payslip reference, the amount you want to pay and a credit or debit card (there's a fee if you use a credit card).
You could also pay using the following alternative methods:
You could make a bank transfer to HMRC via internet or telephone banking using your payslip reference.
Account name [HMRC Cumbernauld]
Account number [12001039]
Sort code [08 32 10]
If you've received a payslip from HMRC you can pay via a cheque payable to [HM Revenue and Customs only] followed by your payslip reference at your bank with a paying in slip. We wouldn't recommend doing this unless you can't use the other options.
As most small businesses only pay corporation tax once a year, direct debit doesn't save much time and you'll have to let HMRC know how much to take each time so we wouldn't recommend using this option.
The payslip reference is a 17 digit code that you can find on your company’s HMRC online account - choose ‘View account’ then ‘Accounting period’ or on the paper payslip that HMRC usually sends out once they've received your CT600. The first 10 digits will always be the company UTR with the following 7 digits relating to the period you are paying for. It should look like this: 1234567890A00101A
Do I need to pay?
If your company has made a profit then you would usually need to pay corporation tax on these profits unless you have losses brought forward to cover the profits.
If your company has made a loss it's unlikely that you'll need to pay any corporation tax but it's worth noting that the following business expenses are not allowable for corporation tax so for corporation tax, you might have made a profit even when the accounts shows a loss:
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Business entertaining;
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Depreciation;
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Fines/penalties.
When do I need to pay?
Corporation tax for small businesses is usually paid 9 months and a day after the period end unless the taxable profits are over £1.5m in which case the corporation tax will need to be paid in instalments.
So for example, a small business with a year end of 31/03/19 would need to pay their corporation tax by 01/01/20.
Unlike other taxes, if you pay your corporation tax early, HMRC will pay you 0.5% interest for the time between payment and the deadline.
If you can't pay on time, call HMRC on 0300 200 3835 as soon as possible to try to arrange a payment plan.
What happens if I don't pay
Assuming you have submitted your corporation tax return on time but haven't paid the tax by deadline HMRC will start to charge interest on a daily basis.
HMRC may take legal action to recover overdue corporation tax including pursuing directors personally for the outstanding tax.
If you haven't submitted the corporation tax return (CT600) by the deadline you will be subject to an initial £100 fine, another £100 if it's not filed 3 months after the deadline, 10% of the estimated tax bill if it's not filed 6 months after the deadline and a further 10% of the estimated tax bill if it's not filed 12 months after the deadline.
PAYE & NI
The easiest and quickest way to pay PAYE & NI is using the HMRC payment portal.
All you'll need is the Accounts Office Reference, the amount you want to pay, the period you're paying for and your card details (there may be a fee for using a credit card).
You could also pay using the following alternative methods:
You could make a bank transfer to HMRC via internet or telephone banking using the reference detailed below.
Account name [HMRC Cumbernauld]
Account number [12001039]
Sort code [08 32 10]
You could send a cheque payable to [HM Revenue and Customs only] and include the reference detailed below to [HMRC, Direct, BX5 5BD]. We wouldn't recommend doing this unless you can't use the other options.
When using direct debit for PAYE & NI you'll have to let HRMC know how much to take each time so we wouldn't recommend using this option.
If you're not using the HMRC payment portal you'll need a more detailed reference. The reference will start with your 13 digit accounts office reference and will then need 4 extra digits to tell HMRC what period you're paying for (YYMM with the month being the month of the tax year rather than the calendar year). If you're paying PAYE quarterly the reference should be for the final month of the period so quarter 1 (06/04/19 - 05/07/19) would be1903 as the month to 05/07/19 is the third month of the tax year in 2019/20. The full reference should look like this: 123PA012345671903
Do I need to pay?
You'll probably need to pay PAYE & NI if you pay anyone you employ more than the national insurance threshold (£8,632 in 2019/20).
If you pay anyone through payroll (including directors) you might have to pay PAYE & NI even when they earn less than £8,632 so always check with your payroll administrator.
As directors are subject to NI in a different way to normal employees there are often situations where there is no PAYE & NI due for the first few months of the tax year but NI to pay in later months.
When do I need to pay?
PAYE and NI is usually paid monthly within 2 weeks of the end of the pay period but if you run a small payroll (less than £1,000 PAYE & NI/month), you might be able to pay quarterly.
Payroll periods run in line with the tax year so the first month of the tax year is 6th of April to 5th of May.
If you're paying monthly for this period you'd need to pay by 19th of May.
If you're paying quarterly, you'd pay the full liability for 6th April to 5th July by 19th July.
What happens if I don't pay
If you don't pay your PAYE & NI on time, HMRC will start to charge interest on a daily basis.
HMRC will allow 1 late payment per year but after that there will be a 1% penalty for between 1-3 further late payments, 2% for 4-6, 3% for 7-9 or 4% for 10 or more late payments.
If your payment is 6 months late, you'll be charged an extra 5% and a further 5% if it's 12 months late.
VAT
The easiest and quickest way to pay VAT is using Direct Debit.
All you'll need to is submit your VAT return on time and HMRC will automatically take the money you owe just after the deadline. You can set this up via your government gateway account.
You could also pay using the following alternative methods:
Bank transfer
You could make a bank transfer to HMRC via internet or telephone banking using your payslip reference.
Account name [HMRC VAT]
Account number [11963155]
Sort code [08 32 00]
Reference [your VAT nr]
You can pay via a cheque payable to [HM Revenue and Customs only] followed by your VAT number at your bank using a paying in slip.
We wouldn't recommend doing this unless you can't use the other options.
The fastest and easiest way to pay your VAT other than via direct debit is to use the payment portal.
All you'll need is your VAT number, the period you're paying for and the amount you're due to pay.
Do I need to pay?
If your company sold goods or services with VAT then you will likely have to pay VAT to HMRC.
When do I need to pay?
Most companies will need to complete VAT returns quarterly and the VAT will need to be paid to HMRC within 1 month and 7 days of the VAT period end.
If you use the annual accounting scheme for VAT your payment deadlines may vary. You can see the full details of deadlines on the annual scheme here.
What happens if I don't pay
Assuming your annual turnover is less than £150k, the penalties will be as follows:
1 payment missed - no penalty
2 payments missed - no penalty
3 payments missed - 2% penalty
4 payments missed - 5% penalty
5 payments missed - 10% penalty
6+ payments missed - 15% penalty
If turnover is over £150k, these percentages will increase.