There are many ways you can pay HM Revenue and Customs (HMRC). Ensure your payment reach HMRC on time to avoid interest on late payment.
Universally, you have to pay HMRC for your self-assessment tax, income tax, stamp duty, corporation tax, Value Added Tax (VAT), pay as you earn (PAYE), national insurance contributions (NIC) and late filing penalty.
How to pay HMRC using the following payment methods.
By debit card or credit card
Go to www.tax.service.gov.uk/pay-online
Telephone or Internet banking
You may contact your own bank and provide the banker with the HMRC bank details:
Tax amount due
Sort code: 08-32-10
Account number 12001020
Account name: HMRC
Remember to provide the reference as shown on the HMRC payslip, for example, if you are paying for corporation tax please provide the 10 digits unique tax reference numbers. This allows HMRC to allocate the payment to your accounts.
Go to www.gov.uk/pay-tax-direct-debit to setup a direct debit payment. You must register for HMRC online services before you can setup direct debit payment. Register for HMRC online services are quick and easy and secure.
For example, you may like to setup direct debit if your business is registered for VAT so that HMRC can automatically take the VAT payment due or refund VAT every quarter from/to your business accounts based on the VAT return you submitted. Your accountants can set this up for you.
Take the HMRC payment slip to any participating Post Office. You may pay by debit card or by cheque. If paying by cheque, please make your cheque payable to Post Office LTD.
Pay by Cheque
If you would like to pay by cheque, please make your cheque payable to HM REVENUE & CUSTOMS ONLY and remember to include your payslip.
Please ensure you affix a correct stamp on your envelop.
Your company may opt for the VAT flat rate scheme if your annual sales are up to £150,000. Under this scheme, the business is not required to keep records on input tax on every purchase transaction. This may save a considerable amount of time on VAT administration. However, businesses still need to keep records of their gross purchases and expenses for corporation tax purposes or income tax purposes.
No record for input tax
Your company charge a standard rate of VAT on sales as usual. The difference of this scheme to that of the standard VAT scheme is that your company does not need to account for input tax on expenses. Your company simply pays a percentage of VAT on sales including all reduced, zero-rated and exempt sales to HM Revenue and Customs.
VAT accounting records
It is highly recommended for your company to keep your accounting records the same way as you would if you are under the Standard VAT scheme. This would enable you to monitor and compare if your company is paying more VAT under the VAT flat rate scheme to HMRC. If your company is persistently paying extra VAT, consider opting back to the VAT standard rate scheme.
Your company must leave the flat rate scheme when its sales exceeded £150,000.
Calculate VAT payable under the VAT flat rate scheme
You multiply your sales inclusive of VAT charged to your customers with the VAT flat rate applicable to your business.
For example, you provide IT consulting services. Your VAT flat rate is 14.5%. Let’s say, your income from your consulting business is £10,000 and you charge 20% VAT on top. Your total income inclusive VAT is £12,000. The VAT payable to HMRC would be £1,740.
The VAT rates for businesses approved under the flat rate scheme vary and it is dependent on the business sector you are in.
Architect, civil and structural engineer or surveyor
Boarding or care of animals
Business services that are not listed elsewhere
Catering services including restaurants and takeaways
Computer and IT consultancy or data processing
Computer repair services
Entertainment or journalism
Estate agency or property management services
Farming or agricultural that is not listed elsewhere
Film, radio, television or video production
Forestry or fishing
General building or construction services*
Hairdressing or other beauty treatment services
Hiring or renting goods
Hotel or accommodation
Investigation or security
Labour only building or construction services*
Laundry or dry cleaning services
Lawyer or legal services
Library, archive, museum or other cultural activity
Manufacturing fabricated metal products
Manufacturing not listed elsewhere
Manufacturing yarn, textiles or clothing
Mining or quarrying
Real estate activity not listed elsewhere
Repairing personal or household goods
Retailing food, confectionery, tobacco, newspapers or children’s clothing
Retailing pharmaceuticals, medical goods, cosmetics or toiletries
Retailing that is not listed elsewhere
Retailing vehicles or fuel
Sport or recreation
Transport or storage, including couriers, freight, removals and taxis
Wholesaling agricultural products
Wholesaling that is not listed elsewhere
*Labour only building or construction services means building or construction services where the materials costs supplied is less than 10% of relevant turnover from such services. If more than this amount, your business is classed as general building or construction services.