Answers · UK 2025/26
Can HMRC collect my Self Assessment tax bill through my tax code instead of a lump sum?
Yes, if you owe less than GBP 3,000, file online by 30 December, and have a PAYE source such as a salary or pension. HMRC then spreads the bill across the next tax year through an adjusted tax code instead of demanding it all on 31 January. Owe GBP 3,000 or more and you must pay the lump sum.
Full answer
HMRC can 'code out' a Self Assessment balance, collecting it gradually through PAYE rather than as a single 31 January payment. Three conditions apply: you owe less than GBP 3,000, you file your online return by 30 December (a month before the normal deadline), and you have employment or pension income taxed under PAYE. Worked example: Raj is employed on a GBP 45,000 salary and also earns freelance income. His 2025/26 return shows GBP 1,800 of extra tax owed. He files online on 12 December 2026, so HMRC adjusts his 2027/28 tax code to collect the GBP 1,800 across 12 months - roughly GBP 150 a month from his pay - instead of demanding it on 31 January 2027. His take-home pay falls slightly each month rather than taking one big hit. Note that coding out cannot be used if it would more than double the tax deducted from your pay, or if it would leave you with less than half your pay. HMRC may then ask for some upfront. Coding out does not apply to the first payment on account. The take-home pay calculator shows how an adjusted tax code changes your monthly net pay, and the income tax calculator estimates the underpayment itself. If you would rather pay in one go, you can opt out in your online account. Details are at gov.uk/pay-self-assessment-tax-bill/through-your-tax-code.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.