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Paying tax to HMRC

This ICAEW Tax Faculty guide summarises the different methods of paying tax over to HMRC. It is not intended to cover other means of paying tax such as coding adjustments. It also touches briefly on what taxpayers can do if they cannot pay.

Download the full guidance as a PDF

Links to the relevant sections of the HMRC website are provided. Full information on how to pay all taxes and duties can be found on HMRC's web page Paying HMRC.

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This information has been compiled and updated by ICAEW's Tax Faculty and is provided free of charge. The faculty provides a broad range of detailed technical and practical guidance on tax matters. Find out more about the benefits of joining the Tax Faculty.

Paying by debit or credit card
  • Payment can be made by credit or debit card online. Note that payment by personal credit card will not be possible from 13 January 2018.
  • Taxes which can be paid using this service are Self Assessment, PAYE, VAT, Corporation Tax, Stamp Duty Land Tax and miscellaneous payments where the reference begins with 'X'.
  • When paying Self Assessment tax don't forget to add K to the 10 digit Unique Taxpayer Reference (UTR).
  • There is a charge when paying by credit card (read current rates). From 13 January 2018 HMRC will not be permitted to make charges for payment by credit card, following the implementation of an EU directive.
  • HMRC may limit the number of times a taxpayer can use a credit or debit card within a certain time to pay their tax. There isn’t a set limit, it depends on HMRC’s view of what’s reasonable based on payment card industry standards and guidance. The rules apply to multiple card payments against the same tax, you can only make extra card payments if each one’s for a different tax. If a taxpayer is unable to pay their tax in full by debit or credit card, they may need to consider alternative methods of payment in good time to avoid possible interest or penalties for late payment.
  • In accordance with payment card industry standards, repayments will automatically be made to payment cards where:
    - the most recent payment was made using a card
    - the repayment is no more than the amount of the last payment made
    - the payment was made within nine months of the creation of the repayment.
Direct debit

Taxpayers can set up a direct debit through their HMRC online account to pay the following taxes:

  • Self assessment
  • Employers’ PAYE and national Insurance
  • Construction Industry Scheme (CIS) deductions
  • VAT
  • Corporation tax,
  • Machine games duty,
  • Miscellaneous payments (with a payment reference beginning with ‘X’).

Except for VAT, for which continuous direct debit authority can be set up, they will have to set this up as a single payment, so the process will need repeating each time they want to make a payment. Agents cannot do this for their clients.

Payment of self assessment tax online or via telephone banking, CHAPS or online

HMRC account details

Account name HMRC Shipley HMRC Cumbernauld
Sort code 08-32-10 08-32-10
Account number 1200 1020 1200 1039
Reference Please quote the 10-digit UTR followed by the letter K

If you are unsure which account to pay in to, use HMRC Cumbernauld.

If paying from an overseas account the following additional details may be needed:

Payments to HMRC shipley

IBAN: GB03 BARC 201147 8397 7692

Payments to HMRC Cumbernauld

IBAN: GB62 BARC 201147 7029 7690

Paying by cheque through the post
  • Electronic payment has been mandatory for VAT since 2010 and for corporation tax since 2011 and payments for these taxes should not be sent to HMRC in the post.
  • Cheques should be made payable to "HM Revenue & Customs only followed by the 10-digit UTR.
  • The taxpayer's name should be written on the reverse of the cheque.
  • Cheques should preferably be paid in at a bank though a payslip is required and can be difficult to obtain. If a self assessment payslip is not available one can be printed off from the HMRC website
  • Alternatively, cheques should be sent to HMRC, Direct, BX5 5BD.
  • Payments made by cheque are not guaranteed to reach HMRC in time, so they should be posted at least three working days ahead to allow for any possible postal and bank processing delays. HMRC is not responsible for such delays.
Payment of tax in advance using certificates of tax deposit

The Certificates of Tax Deposit scheme (CTDs) allows taxpayers to deposit money and use it later to pay certain liabilities.

The minimum deposit is £500, but subsequent deposits can be made. The minimum for further deposits is the lower of:

  • £250; and
  • the amount of needed to bring your total deposits back to £500 if the total had dropped below that (because you have used it to pay tax).

Each time you make a deposit you will be given a new certificate. You can't top up an existing certificate.

  • CTDs can be used to pay self assessment income tax, Class 4 national insurance contributions, capital gains tax (but not annual tax enveloped dwellings), petroleum revenue tax and inheritance tax. They cannot be used to pay corporation tax, VAT or employer PAYE and national insurance contributions.
  • If a CTD is used to settle a liability arising from an HMRC investigation then late payment interest will not be charged from the date the CTD was bought.
  • Interest, which has its own specific rate, is paid gross and is taxable. No interest is paid on deposits of less than £100,000. Interest is only paid for the first six years that a deposit is held. Different rates apply depending on whether the deposit is used to settle a tax liability or is simply withdrawn.
  • HMRC recommends that deposits are made electronically but they can be made by cheque sent to HM Revenue & Customs – CDT Team, Room E1.03, DMB 610, BX5 5AB, United Kingdom.
  • A confirmation letter should be sent to HMRC stating the name and address of the depositor, the amount of the deposit, the date of your letter, and if it is on behalf of a trust or estate, the names of the trust and trustees or the deceased and  executors.

For more information about CTDs see, gov.uk/guidance/certificate-of-tax-deposit-scheme

Budget payment plan for self assessmment tax

A taxpayer can set up a budget payment plan to make regular payments in advance providing their previous self assessment payments are up to date.

The plan allows the taxpayer to decide how much to pay each week or month (they can stop paying for up to six months) but this has to be set up through their HMRC online account, so agents cannot do this for their clients.,

If the payments made under the plan don’t cover the bill, the balance will have to be paid by the normal payment dates.

Paying at bank

Self assessment tax can only be paid at the bank if:

  • the taxpayer still gets paper statements from HMRC; and
  • the taxpayer has the payslip issued by HMRC.

If not then an alternative method of payment will have to be used. It will not be possible to pay self assessment bills at post offices from 15 December 2017.

Can't pay?

Taxpayers who have difficulty in paying their tax may be able to get help from HMRC’s Business Payment Support Service (BPSS) which can be used to make arrangements for time to pay.

Despite its name, the BPSS deals with requests from individuals as well as businesses. Nominated partners in business partnerships can negotiate time to pay on behalf of the partnership or individual partners. Where agent authorisation is in place, the BPSS can make payment arrangements with agents on behalf of their clients.

Taxpayers need to contact the BPSS on telephone number 0300 200 3835 well in advance of when the payment is due: the service is not available where the tax has already become due. In those circumstances taxpayers should contact the office from which they have received a demand.

Interest is charged on late payments and the current rate is 2.75% per year.

Penalties are imposed for late payment. HMRC should waive penalties where a time to pay arrangement has been made before the due date.

For those with more serious payment problems, the charities TaxAid and Tax Help for Older People provide detailed advice about tax debt and how to cope with it, including advice for advisers.

ICAEW Tax Faculty

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If you have any suggestions or become aware of any changes to the guidance above, please email taxfac@icaew.com.