Self Assessment Underpayment: What Happens If You Owe Tax
When your Self Assessment calculation shows you owe tax, you need to pay by 31 January. Here is how the process works and what your options are if you cannot pay in full.
How to Pay
HMRC accepts several payment methods:
- Online banking or bank transfer (fastest — reference your UTR)
- Direct Debit (set up through your HMRC account)
- Debit card online (no fee)
- At your bank or building society
- Cheque by post (slowest — allow 3 working days)
Credit card payments are no longer accepted.
If You Cannot Pay in Full
Time to Pay: Contact HMRC's Self Assessment helpline before the deadline to discuss a Time to Pay arrangement. They may let you spread the payment over 6–12 months. Interest is charged, but penalties may be avoided if you set this up before the due date.
Budget Payment Plan: For future years, set up a monthly Direct Debit to pay towards your tax bill throughout the year. This avoids the lump-sum shock.
Interest and Penalties
If you pay late:
- Interest accrues from the due date at the Bank of England base rate plus 2.5%
- 5% surcharge at 30 days
- Additional 5% at 6 months and 12 months
Prevention
The best approach is knowing what you owe throughout the year so you can save accordingly. Accounted shows your real-time tax estimate, helping you budget month by month.
Penny, our AI bookkeeper, categorises your expenses automatically and flags anything that looks wrong. Try it free for 14 days.
Tax & Compliance Specialists
Our tax specialists have decades of combined experience in UK sole trader and small business taxation, MTD compliance, and HMRC submissions. All content is reviewed against current HMRC guidance before publication and updated quarterly to reflect legislative changes.
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