Self Assessment UK: Registration, Filing, Payments on Account and PenaltiesPAYE vs Self Assessment UK — What's the Difference?
Understanding the difference between PAYE and Self Assessment tax in the UK. How each works, who needs which, and what you need to do.
For a comprehensive overview of income tax, see our Income Tax guide.
PAYE and Self Assessment are two ways tax is collected in the UK. Here’s how they work and which you need.
Read more: See our Self Assessment guide for a complete overview of this topic.
PAYE Explained
What Is PAYE?
| Feature | Details |
|---|
| Stands for | Pay As You Earn |
| How it works | Tax deducted from wages automatically |
| Who does it | Your employer |
| When | Every payday |
| You do | Nothing (usually) |
How PAYE Works
| Step | What Happens |
|---|
| 1 | HMRC sends tax code to employer |
| 2 | Employer calculates tax on each pay |
| 3 | Tax deducted before you get paid |
| 4 | Employer sends tax to HMRC |
| 5 | By year end, correct tax collected |
What’s Collected Through PAYE
| Deduction | Details |
|---|
| Income Tax | Based on your tax code |
| National Insurance | Employee contributions |
| Student Loan | If applicable |
| Pension contributions | Often salary sacrifice |
PAYE Advantages
| Benefit | Details |
|---|
| Automatic | No work from you |
| Spread out | No large bills |
| Accurate | Usually correct by year-end |
| No deadlines | (for you) |
Self Assessment Explained
What Is Self Assessment?
| Feature | Details |
|---|
| How it works | You file a tax return |
| When | Annually (for previous tax year) |
| Calculate | Your own tax liability |
| Pay | Direct to HMRC |
| Deadline | 31 January (online) |
Self Assessment Process
| Step | Action |
|---|
| 1 | Register for Self Assessment |
| 2 | Keep records during tax year |
| 3 | File return after 6 April |
| 4 | HMRC calculates tax owed |
| 5 | Pay by 31 January |
| 6 | Possibly payments on account |
Who Needs Self Assessment
| Situation | Required? |
|---|
| Self-employed | Yes |
| Partner in partnership | Yes |
| Rental income | Yes |
| Foreign income | Yes |
| Untaxed savings/investments | Over allowances |
| Capital gains | Over £3,000 or need to report loss |
| Income over £150,000 | Yes |
| Income £100,000+ | Usually yes (to check) |
| Child Benefit + £60k+ income | Yes (for HICBC) |
| Director (not through PAYE) | Yes |
| Religious minister | Usually yes |
| Claiming tax reliefs | Yes |
PAYE vs Self Assessment Comparison
| Feature | PAYE | Self Assessment |
|---|
| Tax calculated by | Employer | You/HMRC |
| Payment timing | Every payday | Once/twice yearly |
| Paperwork | Minimal | Annual return |
| Deadlines | None for you | 31 January |
| Suits | Simple employment | Complex income |
| Record keeping | Employer does | You must |
Both PAYE and Self Assessment
Common Combinations
| Situation | What You Do |
|---|
| Employed + self-employed | PAYE on salary, Self Assessment for side income |
| Employed + rental income | PAYE on salary, Self Assessment for rent |
| Employed + investments | PAYE + Self Assessment if above allowances |
| Employed + Child Benefit charge | Self Assessment to report |
How It Works Together
| Income Type | How Taxed |
|---|
| Employment | Through PAYE at source |
| Also included | In Self Assessment return |
| Other income | Only in Self Assessment |
| Total tax | Calculated on all income |
| Credit for | PAYE already paid |
| You pay | The difference |
Example
| Income | Amount | Tax Collection |
|---|
| Salary | £50,000 | PAYE |
| Rental profit | £10,000 | Self Assessment |
| Total | £60,000 | — |
| Tax on £60,000 | £11,432 | — |
| PAYE already paid | £7,486 | — |
| Self Assessment due | £3,946 | — |
Self Assessment Key Dates
Annual Deadlines
| Date | What |
|---|
| 5 April | Tax year ends |
| 6 April | New tax year, can file return |
| 5 October | Register for Self Assessment (first time) |
| 31 October | Paper return deadline |
| 30 December | File online to have tax collected via PAYE |
| 31 January | Online return deadline + payment |
| 31 July | Second payment on account (if applicable) |
Penalties for Late Filing
| How Late | Penalty |
|---|
| 1 day late | £100 |
| 3 months late | £10/day up to 90 days (max £900) |
| 6 months late | 5% of tax due or £300 (higher) |
| 12 months late | Further 5% or £300 |
Penalties for Late Payment
| How Late | Penalty |
|---|
| 30 days late | 5% of tax due |
| 6 months late | Further 5% |
| 12 months late | Further 5% |
| Plus | Interest on amount owed |
Payments on Account
What Are They?
| Feature | Details |
|---|
| Advance payments | Towards next year’s bill |
| Amount | Half your previous year’s bill |
| When | 31 January and 31 July |
| First year | None (but larger first bill) |
Example
| Tax Year | Tax Due | Due Date |
|---|
| 2023-24 | £5,000 | 31 Jan 2025 |
| Payment on account 1 (2024-25) | £2,500 | 31 Jan 2025 |
| Total 31 Jan 2025 | £7,500 | — |
| Payment on account 2 (2024-25) | £2,500 | 31 Jul 2025 |
| Balancing payment (2024-25) | Varies | 31 Jan 2026 |
Getting Started with Self Assessment
Registration
| When to Register | Details |
|---|
| By 5 October | After end of tax year you need it |
| Online | gov.uk |
| Wait for | UTR (Unique Taxpayer Reference) |
| Then | Set up Government Gateway |
Records to Keep
| Record | How Long |
|---|
| Income records | 5 years |
| Expenses/receipts | 5 years |
| Bank statements | 5 years |
| Invoices | 5 years |
Filing Options
| Option | Details |
|---|
| HMRC online | Free |
| Commercial software | Various providers |
| Accountant | They can submit |
Summary: PAYE vs Self Assessment
Quick Reference
| You’re… | Tax Collection |
|---|
| Standard employee | PAYE only |
| Employee earning £100k+ | Probably need Self Assessment |
| Self-employed | Self Assessment |
| Landlord | Self Assessment |
| Employee + rental | PAYE + Self Assessment |
| Employee + side hustle | PAYE + Self Assessment |
| Receiving Child Benefit, partner earns £60k+ | Self Assessment |
Key Actions
| If PAYE Only | If Self Assessment |
|---|
| Check tax code correct | Register by 5 October |
| Review annual summary | Keep all records |
| Claim work expenses if eligible | File by 31 January |
| — | Pay by 31 January |
| — | Budget for payments on account |
Understanding which system applies to you — or both — helps you meet your tax obligations and avoid penalties.
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