Paying self-assessment tax is a crucial responsibility for millions of UK taxpayers, particularly for those who are self-employed, landlords, or earning additional income outside of traditional employment. Unlike employees who have their taxes deducted through the PAYE (Pay As You Earn) system, individuals under self-assessment are required to calculate and pay their own taxes directly to HMRC (Her Majesty’s Revenue and Customs).
With the self-assessment tax payment deadline 2025 approaching, it’s essential to understand the steps involved, available payment methods, and the consequences of late payment. Whether you’re a freelancer, contractor, or small business owner, this comprehensive guide will walk you through the process of self-assessment tax filing and provide actionable tips to make the process smoother and more efficient.
What is Self-Assessment Tax?
Self-assessment tax is the process by which individuals report their income to HMRC and pay any tax owed. While most employees have their taxes deducted automatically through PAYE, individuals with additional income streams must calculate and pay their own taxes.
Who Needs to Pay Self-Assessment Tax?
You need to pay self-assessment tax if you:
- Are self-employed or a sole trader earning more than £1,000 per year
- Are a partner in a business partnership
- Earn rental income as a landlord
- Receive untaxed income (e.g., from investments, dividends, or savings)
- Have capital gains exceeding the annual exemption limit
- Receive income from abroad
- Earn more than £100,000 annually through any combination of employment and self-employment
Self-Assessment Tax vs PAYE
| Feature | Self-Assessment Tax | PAYE |
| Tax Calculation | Self-reported and calculated | Automatically deducted by the employer |
| Payment Frequency | Twice yearly (January and July) | Monthly |
| Responsibility | Individual responsibility | Employer responsibility |
When to Pay Self-Assessment Tax
Key Self-Assessment Tax Deadlines for 2025
- 31 January 2025 – Deadline for filing your self-assessment tax return for the 2023/24 tax year and making your first payment.
- 31 July 2025 – Deadline for making your second payment on account for the 2023/24 tax year.
Missing these deadlines could result in penalties, which we’ll cover in detail below.
How to Pay Self-Assessment Tax Online
One of the best ways to pay self-assessment tax is online through the official HMRC portal. Here’s a step-by-step guide on how to do it:
Step 1: Register for Self-Assessment
- If this is your first time filing a tax return, you’ll need to register with HMRC.
- Register online through the HMRC website by providing your National Insurance Number and personal details.
- HMRC will send you a Unique Taxpayer Reference (UTR) number within 10 working days.
Step 2: Gather Your Financial Information
You’ll need the following details:
- Income details (from self-employment, dividends, rental income, etc.)
- Business expenses and receipts
- Bank interest and savings income
- Capital gains (if applicable)
Step 3: Log into Your HMRC Online Account
- Use your Government Gateway ID to log into the HMRC portal.
- Navigate to the “Self-Assessment” section.
Step 4: Complete the Tax Return
- Follow the prompts to enter your income and expenses.
- HMRC will automatically calculate how much tax you owe.
Step 5: Pay Your Tax
You can choose from several payment methods:
- Direct debit – Set up a one-time or recurring payment.
- Debit or credit card – Payments are processed immediately.
- Bank transfer – Use Faster Payments, CHAPS, or Bacs.
Direct Debit vs Card Payment for Self-Assessment Tax
| Payment Method | Processing Time | Fees | Recommended for |
| Direct Debit | 3–5 working days | Free | Regular payments and low risk of missing deadlines |
| Debit/Credit Card | Immediate | May incur processing fees | Last-minute payments or one-off payments |
| Bank Transfer | Same day (if using Faster Payments) | Free | Large payments or avoiding card fees |
Self-Assessment Tax Payment for Freelancers
Freelancers and self-employed individuals often face challenges in managing irregular income and tax payments. To avoid large lump-sum payments, consider:
- Setting aside 20–30% of your income monthly for taxes.
- Using accounting software to track income and expenses.
- Making voluntary payments throughout the year to avoid a large bill in January.
Steps to Amend a Self-Assessment Tax Return
If you discover an error after submitting your tax return, you can amend it:
- Log into your HMRC account.
- Select “Self-Assessment” and choose “Amend return.”
- Correct the relevant sections and resubmit.
- HMRC will adjust your tax liability and notify you of any changes.
You can amend your return within 12 months of the original filing deadline.
Penalties for Late Self-Assessment Tax Payments
Failing to pay your self-assessment tax on time can result in steep penalties:
| Delay Period | Penalty |
| Up to 30 days | 5% of the unpaid tax |
| 31–90 days | An additional 5% of the unpaid tax |
| After 6 months | 5% of the unpaid tax plus daily interest |
| After 12 months | 5% of the unpaid tax plus additional penalties for concealment |
How to Avoid Penalties:
- Set up payment reminders.
- Use the HMRC app to track payment deadlines.
- Opt for direct debit to automate payments.
Self-Assessment Tax vs Corporation Tax
| Feature | Self-Assessment Tax | Corporation Tax |
| Who Pays | Individuals | Companies |
| Tax Rate | Variable based on income | 19% (for profits up to £50,000) |
| Filing Deadline | 31 January | 9 months after the end of the accounting period |
Paying Self-Assessment Tax Through Accountant vs DIY
| Method | Pros | Cons |
| Through an Accountant | Professional advice maximises deductions, saves time | Costs £150–£500+ per year |
| DIY | Free, direct control over finances | Higher risk of mistakes, time-consuming |
Best Ways to Pay Self-Assessment Tax
- Direct Debit – Best for automatic payments and avoiding missed deadlines.
- Debit Card – Best for immediate payments.
- Bank Transfer – Best for larger payments and avoiding card fees.
- Pay through Accountant – Best for complex tax situations or maximising deductions.
Frequently Asked Questions (FAQs)
What happens if I miss the self-assessment tax deadline?
You’ll face a 5% penalty for payments up to 30 days late, with an additional 5% charges after 6 and 12 months. Interest also accrues daily until paid.
Can I pay self-assessment tax in instalments?
Yes, you can set up a “Time to Pay” plan with HMRC to spread payments over time. Interest will still apply, but you can avoid larger penalties.
Is it better to pay by direct debit or card?
Direct debit takes a few days to process but is free and helps avoid missed deadlines. Card payments are immediate but may include fees for credit cards.
How do I know if I need to file a self-assessment tax return?
You need to file if you’re self-employed, a landlord, or earn untaxed income over £1,000 in a tax year.
Can I correct a mistake after filing?
Yes, you can amend your return online within 12 months of the deadline. Any overpayments will be refunded; underpayments must be settled with interest.
Conclusion
Paying self-assessment tax doesn’t have to be stressful. By understanding the process, using the right payment methods, and keeping track of deadlines, you can simplify your tax filing experience and avoid penalties. Whether you’re a freelancer, landlord, or self-employed professional, staying organised and proactive is key to managing your self-assessment tax effectively.
Take advantage of online resources and HMRC’s payment options to make the process as smooth as possible. Remember, the self-assessment tax payment deadline 2025 is on 31 January — don’t leave it to the last minute!
