How do I pay Income Tax?
Income tax can be paid in various ways depending upon the type of income and whether you are employed, self-employed or not working. The different ways Income Tax is collected include:
PAYEÂ (Pay- as- you-earn).
- Tax deducted â€˜at sourceâ€™. Whereby tax is deducted from your bank/building society interest before the interest is paid to you.
- In some cases, a one off payment.
If you are an employee or you receive a company or private pension, your employer or pension provider will deduct tax throughout the year using the tax code HM Revenue & Customs (HMRC) provides them. This is known at the Pay As You Earn system (PAYE).
If you are self-employed, you will be responsible for filling in a Self-Assessment Tax Return which can be done either online or by filling out a paper form. You will probably pay your income tax in two instalments plus a third final â€˜balancing paymentâ€™
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