Starting a new business? Get 40% off our accountancy services for 3 months! 😎


If you run a business or side hustle, while also paying tax through PAYE (for example, because you’re employed or receiving a company pension), you may be able to pay your Self Assessment tax bill through your PAYE tax code. This isn’t for everyone, and there are specific requirements you’ll need to tick off first, so we’ll look at who qualifies, and how it works.

What is PAYE?

What are the criteria for paying my tax bill through my PAYE tax code?

When can’t I pay through my tax code?

How does paying through my tax code work?

What are the pros and cons of paying my taxes through my tax code?

When is the deadline to submit my Self Assessment to pay my taxes through my PAYE tax code?

PAYE stands for Pay As You Earn, and it’s essentially how employed people pay their Income Tax and National Insurance. Each employee has a specific tax code that indicates how much tax their employer should deduct from their wages each time they pay them – meaning you don’t have to worry about making any payments yourself!

How do tax codes work?

Understanding your tax code may be confusing at first, as it’s just a series of numbers and letters. The letters usually refer to things like allowances you’re claiming or whether you’re being emergency taxed (when HMRC isn’t sure how much you’re earning, so they ‘emergency tax’ you instead. In many cases this is too much tax, so always ensure you speak with HMRC to get a proper tax code). The numbers indicate how much tax-free allowance the individual is entitled to that tax year.

The most common letter is L, which means you qualify for the normal amount of tax-free personal allowance.

To pay your tax bill through your PAYE tax code, you’ll need to meet all three conditions set by HMRC:

There are some exceptions to paying your Self Assessment tax bill through your tax code:

If you’re self-employed, you won’t be able to pay Class 2 National Insurance contributions through your tax code (unless it’s been due since before 6th April 2015). You’ll need to choose another method to pay your Class 2 NI contributions by the deadline date.

The process is much easier than you think. If you meet all three conditions, HMRC will automatically collect the tax you owe through your tax code unless you’ve asked them not to on your Self Assessment tax return.


The tax you owe for Self Assessment will be deducted from your salary or pension in equal installments, similar to income tax or National Insurance payments. It’s spread out over twelve months, so you don’t need to pay up all at once!

This depends on your circumstances, but some people prefer to pay through their tax code, so they don’t have to worry about paying manually. The tax will simply be collected in equal installments across the tax year (which is also great for your cash flow).

It’s worth noting that paying your tax bill this way means your tax code will change and your employer will be notified, so they’ll know you’ve submitted a Self Assessment return.

If you’ve spoken to your employer about this, it’s nothing to worry about! But it’s worth thinking about if you don’t want your employer to know about your side hustle, or if there are rules in your contract to suggest you can’t work outside of your employment.

If you meet all the requirements and you’re happy to pay your taxes through your tax code, you must submit your online Self Assessment by the 30th of December. If you submit paper returns, the deadline for this is the 31st of October instead!

Need some help completing your Self Assessment? Call us on 020 3355 4047 to learn more about our online accountancy services or get an instant quote.

About The Author

Rachael Johnston

A creative content writer specialising across business, finance and software topics. I have a love for all things writing, and creating engaging, easy to understand content that helps everyday people! Learn more about Rachael.

More posts by this author
Notify of
Inline Feedbacks
View all comments

Read more posts...

What is a Non-Established Taxable Person for VAT?

There are special VAT rules in place for online sellers who are classed as non-established taxable persons (NETPs), and use an online…

Read More

The Accountancy Partnership – Our Positive Reviews

Here at The Accountancy Partnership, we’re proud of our customer reviews The reviews we receive from our customers show how hard we…

Read More

What Type of Legal Structure Should I Choose When I Start a Business?

The structure that you choose when you start a business affects how the business operates, the amount of tax you pay, how…

Read More
Back to Blog...

Confirm Transactions

The number of monthly transactions you have entered based on your turnover seem high. A transaction is one bookkeeping entry such as a sale, purchase, payment or receipt. Are you sure this is correct?

Yes, submit my quote
No, let me change it

Please contact our sales team if you’re unsure

VAT Returns

It is unlikely you will need this service, unless you are voluntarily registered for VAT.

Are you sure this is correct?

Yes, the business is VAT registered
No, let me change it

Call us on 020 3355 4047 if you’re not sure.


You will receive our bookkeeping software Pandle for free, as part of your package.

You can use this to complete your own bookkeeping, or we can provide a quote to complete your bookkeeping for you.

Please select and option below:

I will do my own bookkeeping
I want you to do my bookkeeping

Call us on 020 3355 4047 if you’re not sure.