If you meet certain conditions, you can pay your tax bill via your tax code. This means that your employer will deduct extra tax from your salary to cover your bill. You'll pay the same amount as you would in a lump sum, but over 12 monthly deductions.

Many side hustlers meet these requirements and are able to pay their tax bills via their tax code, saving many the expense of a lump sum.

You can pay your bill via the tax deducted from your salary, so long as all these apply:

  • your total tax bill is less than ยฃ3,000

  • you already pay tax through PAYE, for example, youโ€™re an employee or you get a company pension

  • you submitted your tax return by 30 December

Unfortunately, you will not be able to pay your tax bill through your PAYE tax code if either:

  • you'd end up paying more than half your income as tax, or

  • your tax from self-employment is more than your tax from employment

The tax you owe can be deducted from your salary if you meet the criteria. It's deducted in equal instalments over 12 months, along with your usual tax deductions. You'll pay the same amount as you would in a lump sum (there's no interest) but in a much more affordable manner.

Did this answer your question?