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Can I pay Self Assessment tax through PAYE?

  • 3 min read
  • Last updated 12 Jan 2023

What does paying your tax bill through PAYE actually mean?

Paying your tax bill through PAYE is when your tax bill is taken from your salary (or pension) in monthly instalments, along with your usual tax deductions, instead of paying a lump sum. 

Whether you pay Self Assessment tax through PAYE, through your salary or through your tax code, they all mean the same thing. They’re interchangeable, so we’ll refer to all three throughout this guide in the name of fairness. 

Let’s go!

What is PAYE vs what is a tax code?

PAYE stands for pay as you earn and is a way of paying Income Tax and National Insurance through your salary as an employee. 

Your employer does this automatically for you based on your tax code and sends any taxes you owe directly to HMRC. Phew, no work for you. Well, tax-wise anyway. 

Your tax code is a series of numbers and letters that tells HMRC the amount of tax you should be paying. The numbers correspond to tax-free income you’re entitled to or money you’re paying back to HMRC. The letters are (usually) linked to any allowances you’re claiming or emergency tax.

Use our tax code calculator to make sure you’re on the right one. 

Your situation

Outlined number oneImage of an arrow
Tax code
Annual salary


Outlined number two
  • PAYE earnings

How your tax code is calculated

There are three main components that determine your tax code:

  • What you earn
  • Allowances you’re claiming
  • Your tax-free allowances

Who can pay tax via PAYE/tax code?

To be eligible to pay tax via PAYE or your tax code, there are a few requirements. You didn’t think it would be that easy, did you?

  • Your tax bill has to be less than £3,000
  • You already pay tax through PAYE (you’re an employee or get a company pension)
  • You file your online tax return by 30th December

There are also situations where you cannot pay your bill via tax code, like the ones listed below. 👇

  1. If you owe £3,000 or more you have to pay in a lump sum by 31st of January

  1. If your total tax bill was £3,000 or more and you made a part payment to reduce it (points for ingenuity, but you can’t do that unfortunately)

  1. If you’d end up paying twice as much tax as you normally do
    • This can happen if you earned more self-employed income compared to the previous year or had a larger payment on account charge

  1. If you owe tax that is more than 50% of what you earn annually at your PAYE job
    • Let’s say you earn £5,000 a year at your job and this year you owe £2,700 in taxes. You won’t be able to file through tax code because 50% of your PAYE wage is £2,500 and therefore you’d be paying £200 over this amount

How do I pay my Self Assessment tax?

To pay your tax bill, you must file a Self Assessment tax return. 

Your tax code will change if you opt to pay your Self Assessment tax through PAYE. HMRC will send you a letter and your employer will get a tax code notice, also called a P6

As a TaxScouts user, you can always check your online account or speak to your accountant if you have any questions. 

What are the tax codes?

The benefits of paying through tax code

It’s all great learning about another way to file, but what are the benefits of paying this way?

Here are a few that might sway you to consider when you pay Self Assessment tax in the future:

  • You don’t have to pay a lump sum (hooray!)
  • You’re able to budget your money (woop!)
  • It’s completely automatic so you don’t have to think about it (yes!)
  • You’re HMRC-compliant (oh yeah!)

The dreaded deadline

Yep, there’s a deadline. There’s always a deadline. 

You need to file your Self Assessment tax return by 30th December to be able to opt into paying your tax bill through PAYE. 

If you miss this deadline, don’t panic. You can still file your tax return until the 31st of January without any late fines or penalties. The only catch is that you’ll have to pay your tax bill in a lump sum. 

Need help?

That’s what we’re here for! 
Our accredited accountants can sort and file your tax return for you, so you don’t need to bother with the stress. Learn more here.

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