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Pay your tax bill through PAYE (employment)

If you’re employed as well as self employed, when you submit your tax return to HMRC, you may be offered the feature of paying your tax bill through your salary.

PAYE (Pay As You Earn) is the standard way of tax collection from employees.

On a payslip from an employer, you’ll see deductions for tax and national insurance. This means that you’re paying tax through the year, as opposed to having to file a tax return for employment.

The tax and national insurance payments are taken in line with your tax code. The tax code is your personal allowance for the financial year (e.g 1150L).

If you’re self employed and employed, and meet certain criteria, HMRC can adjust your tax code to claim the tax amount due directly from your salary.

This means that the tax amount which you owe for your self employment will be taken from your salary (or pension) in equal instalments over 12 months, as well as any employment tax due.

Standard Criteria

You can pay your Self Assessment tax bill through your PAYE code as long as:

  • you owe less than £3,000 on your tax bill
  • you already pay tax through PAYE, for example you’re an employee or you get a company pension
  • you submitted your paper tax return by 31 October or your online tax return online by 30 December

HMRC can then automatically claim the amount which you owe providing you meet all three conditions, unless you specifically ask for the payment to be instead made direct to HMRC (such as by debit card).

Updated on February 17, 2023

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