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You’ve probably seen the term BACS on your bank statement, but what actually is a BACS payment? BACS (or Bankers Automated Clearing System) is an electronic system used to make payments directly from one bank account to another. It’s the most common type of payment made bank-to-bank – and it’s a secure method of payment that’s been used in the UK since 1968, and for over 100 billion transactions!
There are two main types of BACS payment: Direct Debit and Direct Credit.
You’ll normally see BACS payments on your bank statement for regular payments like your salary, pensions, state provided benefits and tax credits. When it comes to BACS debit payments, these are more associated with outgoing regular payments such as your Netflix subscription, some household bills etc.
If you want to pay using BACS, you’ll need your UTR (Unique Taxpayer Reference) number. You get this on registering for Self Assessment with HMRC. If you’ve lost it, here’s how to find your UTR. Or if you’ve never registered with HMRC before to pay your tax via a tax return, don’t forget to register by 5th October the year after you start trading.
In order to actually make the payment, you should use the details below:
|Account name||Sort code||Account number|
In fact, paying via the BACS system is one of the cheapest ways to collect payments. All you need to Direct Credit someone is their name, the bank name, the account number and sort code.
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