Chapter 5

Paying tax to HMRC as a self-employed person

Learn all about how the self-employed tax year works, how to pay self-employed tax, and ‘payments on account’.

Illustrated person holding a laptop next to a vat collected and vat paid sheet.

How to pay self-employed tax

There are several ways you can pay your self-employed income tax, including:

  • online or telephone banking
  • at your bank or building society (with a paying-in slip from HMRC)
  • by debit or corporate credit card
  • BACS
  • Direct Debit
  • by cheque through the post

Some of these methods are quicker than others. Make sure to leave enough time for HMRC to receive the payment by the deadline.

How does the self-employed tax year work?

The self-employment tax year runs from 6 April to 5 April. You must complete your self assessment tax return and pay any tax and National Insurance due by midnight on 31 January following the end of the tax year. For example, for the 2021-22 tax year, which ended on 5 April 2022, the deadline was midnight 31 January 2023.

If you are submitting a paper return instead of filing online there is an earlier deadline of midnight on October 31 following the end of the tax year. You have until January 31 to pay the tax you owe.

What are payments on account?

Payments on account are advance payments made toward your next tax bill. These are paid in two installments, due by 31 January and 31 July. Each payment is half of your previous year’s tax bill.

When you become self-employed, your first payment on account will be due at the same time as your tax payment from your first self assessment. This means your first self-employed tax bill may be higher than you expect.

Your payments on account are based on your previous tax bill. HMRC is assuming you will earn the same the following year, but you may earn more or less. You will need to make a ‘balancing payment’ if your tax bill ends up being more.

If you know your tax bill is going to be lower than last year you can ask HMRC to reduce your payments on account. Find out more about payments on account.

Start using Xero for free

Access Xero features for 30 days, then decide which plan best suits your business.

  • Included
    Safe and secure
  • Included
    Cancel any time
  • Included
    24/7 online support