Squatting and the law

Overview

Squatting is when someone deliberately enters property without permission and lives there, or intends to live there. This is sometimes known as ‘adverse possession’.

Squatting in residential buildings (like a house or flat) is illegal. It can lead to 6 months in prison, a £5,000 fine or both.

Anyone who originally enters a property with the permission of the landlord is not a squatter. For example, if you’re renting a property and fall behind with rent payments you’re not squatting if you continue to live there.

Although squatting in non-residential building or land is not in itself a crime, it’s a crime to damage the property (a property).

It’s usually a crime not to leave land or property when you’re instructed to do so by:

the owner

the police

the council

a repossession order

Squatting in non-residential properties

A non-residential property is any building or land that is not designed to be lived in.

Simply being on another person’s non-residential property without their permission is not usually a crime. The police can take action if squatters commit other crimes when entering or staying in a property.

Crimes include:

causing damage when entering the property (a property)

causing damage while in the property (a property)

not leaving when they (squatters)’re told to by a court

stealing from the property (a property)

using utilities like electricity or gas without permission

fly-tipping

not obeying a noise abatement notice

Contact the police if you see someone breaking into or damaging property.

Squatters' rights to property

A long-term squatter can become the registered owner of property or land they’ve occupied without the owner’s permission.

Get legal advice from a conveyancer or solicitor if you’re a squatter in a property and want to claim ownership.

Who can apply

You can apply if you can prove:

you, or a succession of squatters, have occupied the property (a property) continuously for 10 years (12 years if it (a property)’s not registered with HM Land Registry)

you (or your predecessors) acted as owners of the property (a property) for the whole of that time (10 years)

you (or any of your predecessors) did not have the owner’s permission, for example the property (a property) was not originally rented to a squatter

If the property (a property)’s registered

Fill in a form for adverse possession.

Complete and sign a written ‘statement of truth’, or get a solicitor to prepare this for you.

Send your form and statement to the HM Land Registry Citizen Centre.

HM Land Registry will decide if your application is valid and will let the property owner know. The owner has 65 days to object - your application will usually be automatically rejected if they do.

You’ll be registered as the owner of the property (a property) if there’s no objection.

You can apply again after 2 years if:

the owner (the owner’s) has not tried to remove you

the property (a property) has not been reclaimed

you’re still in possession of the property (a property)

HM Land Registry will usually then register you as the owner.

If the property (a property)’s unregistered

Apply for first registration - include your statement (a written ‘statement of truth’) with your application.

HM Land Registry will:

inspect the property (a property) - you must pay a fee for this

decide if your application is valid

let the property owner know, if they (the property owner) have their (the property owner) details

You can try to come to an agreement with the owners if they object. HM Land Registry will arrange a tribunal to decide who owns the property (a property) if you cannot agree or do not want to.

You may have to pay the costs of the owner, such as their reasonable legal fees, no matter what the outcome.

Stop squatters legally possessing property

HM Land Registry will tell you if squatters apply for legal ownership of your property if it’s registered - you must take action if you want to keep it.

Get legal advice from a conveyancer or solicitor if squatters try to claim your property.

How you block an application depends on whether your property is registered with HM Land Registry or not.

Registered properties

You’ve 65 days to object to an application - HM Land Registry will tell you what you need to do.

HM Land Registry will reject the squatters’ application if you’ve got a valid objection.

You must take action to remove the squatters (the squatters’) and reclaim your property once the squatters’ claim (the squatters’ application) is rejected.

You will not be able to object again if you’ve done nothing within 2 years of the original application and the same squatters (the squatters’) reapply.

Unregistered properties

You can object to a squatter’s application. HM Land Registry will tell you what you need to do.

HM Land Registry may not be able to contact you if your property is not registered.

HM Land Registry will decide if your objection is valid - if it is they (HM Land Registry)’ll ask if you want to negotiate with the squatters (the squatters’), for example offer to sell them (the squatters’) the property (your property). You’ll be given time to do so.

A tribunal will decide who owns the property (your property) if you cannot agree - HM Land Registry (HM Land Registry) will arrange this.

Remove squatters

You can remove squatters using an interim possession order (IPO) or making a claim for possession.

Do not try to remove the squatters (the squatters’) yourself using force or the threat of force - you’re committing a crime if you do.

Get legal advice from a solicitor if you need help making a claim for possession.

Interim possession orders

You can only apply for an IPO if it’s been 28 days or less since you found out your property’s been squatted.

Fill in an application for an IPO (an interim possession order (IPO)) and send it to your local county court.

The court (your local county court) will send you confirmation of your IPO (an interim possession order (IPO)) within a few days. They (your local county court) will also send you documents that you must give to the squatters (the squatters’) within 48 hours.

After being served with an IPO squatters can be sent to prison if they do not:

leave your property within 24 hours

stay away from your property for 12 months

To get final possession of the property (your property), you must make a claim for possession. You can do this on your IPO application form or separately online.

Exceptions

You cannot use an IPO if:

you’re also making a claim for damages caused by the squatters (the squatters’) - instead you should make an ordinary claim for possession

you’re trying to evict former tenants, sub-tenants or licensees

Claim for possession

Make a claim for possession if it’s been more than 28 days since you found out about the squatters (the squatters’).

Where to get help

You may be classed as homeless if you’re squatting. Get advice from Shelter or Shelter in Wales.

You can also contact your council for help.

Report squatters

Call the police if you:

find people squatting in a residential property you own

see someone breaking into anywhere

think someone is squatting


Pay your Self Assessment tax bill

Overview

The deadlines for paying your tax bill are usually:

31 January - for any tax you owe for the previous tax year (known as a balancing payment) and your first payment on account

31 July for your second payment on account

If you delayed making a payment on account in July 2020 because of coronavirus (COVID-19), this will be added to your tax bill due by 31 January 2021.

Pay Self Assessment now

You can pay in regular monthly instalments, if you prefer.

You can get help if you cannot pay your tax bill on time.

This guide is also available in Welsh (Cymraeg).

Ways to pay

Make sure you pay HM Revenue and Customs (HMRC) by the deadline. You’ll be charged interest and may have to pay a penalty if your payment is late.

The time you need to allow depends on how you pay.

You can no longer pay at the Post Office.

Same or next day

through your online bank account

online or telephone banking (Faster Payments)

CHAPS

by debit or corporate credit card online

at your bank or building society

You need a paying-in slip from HMRC (HM Revenue and Customs (HMRC)) to pay at a bank or building society.

3 working days

Bacs

Direct Debit (if you’ve set one up with HMRC (HM Revenue and Customs (HMRC)) before)

by cheque through the post

5 working days

Direct Debit (if you have not set one up with HMRC (HM Revenue and Customs (HMRC)) before)

If the deadline falls on a weekend or bank holiday, make sure your payment reaches HMRC (HM Revenue and Customs (HMRC)) on the last working day before (unless you’re paying by Faster Payments or by debit or credit card).

Problems with payment services

Online payment services may be slow during busy times. Check if there are any current problems or times they are not available.

Direct Debit

Set up a Direct Debit through your HM Revenue and Customs (HMRC) online account to make single payments for 31 January.

You can also set up another Direct Debit if you need to make a payment on account.

You’ll need to set up single payments each time you want to pay by Direct Debit.

Reference number

You’ll need to use your 11-character payment reference. This is your 10-digit Unique Taxpayer Reference (UTR) followed by the letter ‘K’.

You’ll find it (your 11-character payment reference) either on your:

HMRC (HM Revenue and Customs (HMRC)) online account

paying-in slip, if you get paper statements

Your payment may be delayed if you use the wrong reference number.

Allow 5 working days to process a Direct Debit the first time you set one up. It should take 3 working days the next time if you’re using the same bank details.

If you’re unable to pay your Self-Assessment tax bill in full by card, you should use another payment method like a bank transfer.

Make an online or telephone bank transfer

You can pay your Self Assessment bill using Faster Payments, CHAPS or Bacs.

Pay by Faster Payments, CHAPS or Bacs

Your bill will tell you which account to pay in to. If you do not have a bill, or you’re not sure, use HMRC Cumbernauld.

Account details to use

Sort code | Account number | Account name

08 32 10 | 12001039 | HMRC Cumbernauld

08 32 10 | 12001020 | HMRC Shipley

If your account is overseas

Bank identifier code (BIC) | Account number (IBAN) | Account name

BARCGB22 | GB62BARC20114770297690 | HMRC Cumbernauld

BARCGB22 | GB03BARC20114783977692 | HMRC Shipley

What you’ll need

You’ll need to use your 11-character payment reference when you pay. This is your 10-digit Unique Taxpayer Reference (UTR) followed by the letter ‘K’.

You can find it (your 11-character payment reference) on your:

HMRC (HMRC Shipley) online account

How long it takes

Payments by Faster Payments (online or telephone banking) usually reach HM Revenue and Customs (HMRC) on the same or next day, including weekends and bank holidays.

CHAPS payments usually reach HMRC (HM Revenue and Customs (HMRC)) the same working day if you pay within your bank’s processing times.

Bacs payments usually take 3 working days.

Payments from overseas may take longer - check with your bank.

Multiple payments by CHAPS

Send an online CHAPS enquiry form if you want to make a single CHAPS payment for multiple Self Assessment bills, using more than one payment reference number.

HMRC’s (HM Revenue and Customs (HMRC)) banking address is:

Approve a payment through your online bank account

You can pay your Self Assessment bill directly using your online or mobile bank account.

When you’re ready to pay, select ‘start a payment’ and then ‘pay by bank account’. You’ll then be directed to sign in to your online or mobile banking account to approve your Self Assessment payment.

The payment is usually instant but sometimes it takes up to 2 hours to show in your account (your online or mobile banking account).

You’ll need to have your online banking details ready to pay this way.

By debit or corporate credit card online

You can pay online.

There’s a fee if you pay by corporate credit card or corporate debit card. The fee is not refundable.

There’s no fee if you pay by personal debit card.

You cannot pay by personal credit card.

Use your 11-character payment reference when you pay. This is your 10-digit Unique Taxpayer Reference (UTR) followed by the letter ‘K’. You’ll find it either:

in your HMRC (HM Revenue and Customs (HMRC)) online account

on your paying-in slip, if you get paper statements

HMRC (HM Revenue and Customs (HMRC)) will accept your payment on the date you make it, not the date it reaches their (HM Revenue and Customs (HMRC)) account - including on bank holidays and weekends.

If you’re unable to pay your Self Assessment tax bill in full by card, you should use another payment method like a bank transfer.

At your bank or building society

You can only pay at your branch by cash or cheque if you both:

still get paper statements from HM Revenue and Customs (HMRC)

have the paying-in slip HMRC (HM Revenue and Customs (HMRC)) sent you

Make your cheque payable to ‘HM Revenue and Customs only’ (HM Revenue and Customs (HMRC)).

Write your 11-character payment reference on the back of the cheque (your cheque). This is your 10-digit Unique Taxpayer Reference (UTR) followed by the letter ‘K’. You’ll find the reference number on the paying-in slip (the paying-in slip HMRC (HM Revenue and Customs (HMRC)) sent).

HMRC (HM Revenue and Customs (HMRC)) will accept your payment on the date you make it, and not the date it reaches their (HM Revenue and Customs (HMRC)) account (as long as you pay from Monday to Friday).

If you do not have a paying-in slip

You’ll need to pay by another method instead, for example:

debit or corporate credit card online

online or telephone banking

Direct Debit

By cheque through the post

You can send a cheque by post to HM Revenue and Customs (HMRC).

You do not need to include a street name, city name or PO box with this address.

Allow 3 working days for your payment to reach HMRC (HM Revenue and Customs (HMRC)).

What to include

Make your cheque payable to ‘HM Revenue and Customs only’.

Write your 11-character payment reference on the back of the cheque (your cheque). This (your 11-character payment reference) is your 10-digit Unique Taxpayer Reference (UTR) followed by the letter ‘K’. You’ll find this (your 11-character payment reference) on your payslip.

Include the payslip HMRC (HM Revenue and Customs (HMRC)) sent you (if you still get paper statements). Do not fold the payslip or cheque or fasten them together.

Your payment may be delayed if you do not fill in your cheque correctly.

If you do not have an HMRC (HM Revenue and Customs (HMRC)) payslip

You can print a slip to use to pay by post. You cannot use this at a bank.

Pay in instalments

If you’ve already filed your Self Assessment tax return, you might be able to pay the bill in instalments.

What you need to do depends on whether you want to:

make payments against your latest bill

make advance payments against your next bill

If you cannot afford to pay your latest bill

You can set up a payment plan to spread the cost of your latest Self Assessment bill (the bill) if all the following apply:

you owe £30,000 or less

you do not have any other payment plans or debts with HMRC (HM Revenue and Customs (HMRC))

your tax returns are up to date

it’s less than 60 days after the payment deadline

You can choose how much to pay straight away and how much you want to pay each month. You’ll have to pay interest.

If you don’t keep up with your repayments, HM Revenue and Customs (HMRC) can ask you to pay everything you owe.

There are 2 ways you can set up a payment plan:

set up a payment plan online

call the Payment Support Service

If you want to make regular payments in advance

You can set up a budget payment plan if you want to put aside money to cover your next Self Assessment tax bill.

This is different from payments on account, which you normally make once every 6 months towards your next tax bill.

The budget payment plan (a budget payment plan) lets you:

decide how much to pay each week or month

stop paying for up to 6 months

You must be up to date with your previous Self Assessment payments.

Set up your plan using your HM Revenue and Customs (HMRC) online account. Go to the Direct Debit section and choose the budget payment option when filling in the Direct Debit form.

If the amount in your budget payment plan (a budget payment plan) does not cover your next bill in full, you’ll need to pay the difference by the payment deadlines.

Through your tax code

You can pay your Self Assessment bill through your PAYE tax code as long as all these apply:

you owe less than £3,000 on your tax bill

you already pay tax through PAYE, for example you’re an employee or you get a company pension

you submitted your paper tax return by 31 October or your online tax return online by 30 December

How it’s set up

HM Revenue and Customs (HMRC) will automatically collect what you owe through your tax code if you meet all 3 conditions, unless you’ve specifically asked them not to (on your tax return).

If you’re not eligible, you will not be able to pay this way.

When you cannot pay through your tax code

You will not be able to pay your tax bill through your PAYE tax code if:

you do not have enough PAYE income for HMRC (HM Revenue and Customs (HMRC)) to collect it

you’d pay more than 50% of your PAYE income in tax

you’d end up paying more than twice as much tax as you normally do

If you’re self-employed you cannot pay Class 2 National Insurance through your tax code, unless it’s been due since before 6 April 2015. You must use one of the other ways to pay by the deadline instead.

How deductions are made

The tax you owe will be taken from your salary or pension in equal instalments over 12 months, along with your usual tax deductions.

Check your payment has been received

View your HM Revenue and Customs (HM Revenue and Customs (HMRC)) online account to check if your payment’s been received - it should show as paid between 3 to 6 working days later.

If paying by post, you can include a letter with your payment to ask for a receipt from HMRC (HM Revenue and Customs (HMRC)).


Apply to bankrupt someone who owes you money

Overview

You have to present a bankruptcy petition to a court if you want to bankrupt someone because they owe you money.

There are also other ways to recover money you’re owed.

A bankruptcy petition is an application to the court for someone’s assets to be taken and sold to pay their debts.

Presenting a petition can be complicated. Most people use a solicitor or other professional to help them.

Using a mediation service could be quicker and cheaper. Mediation is when an impartial person helps 2 sides work out an agreement.

You can contact the Insolvency Service if you have questions about making someone bankrupt.

How to present a petition

Prove you’re owed at least £5,000 or a share of debts totalling at least £5,000.

Check for other bankruptcy petitions against the person who owes you money (the ‘debtor’).

Fill in the forms and deliver them to the court.

Fees

The court fees to make someone bankrupt are:

£990 petition deposit (for managing the bankruptcy)

£280 for court costs

Pay the fees (The court fees to make someone bankrupt) using cash, postal order or a cheque made payable to ‘HM Courts and Tribunals Service’. You can pay by credit or debit card if you apply online.

Prove you're owed £5,000 or more

To make someone bankrupt you must be owed one of the following:

at least £5,000

a share of debts that total at least £5,000

You must provide evidence to the court that you’re owed this money (£5,000 or more). There are 2 ways to do this.

If you’ve issued a statutory demand (a request for payment) to the debtor, confirm that you did this by filling in a certificate of service (form N215).

Alternatively, get a sheriff’s or bailiff’s statement showing:

you got a court judgment for the money

the sheriff or bailiff (a sheriff’s or bailiff’s) could not recover enough assets to pay the debt

Check for other bankruptcy petitions

You must check if the debtor has had any bankruptcy petitions against them in the past 18 months. These checks are called ‘searches’.

Most petitions are presented in the area where the debtor lives. Government departments, including HM Revenue and Customs (HMRC), present all petitions in London.

Check for petitions presented in London

Carry out checks using the public computers at either:

the Rolls Building of the Royal Courts of Justice

the Central London County Court

It costs £11 to use the computers for 15 minutes. You can pay by debit or credit card or with cash.

Check for petitions presented in a county court outside London

Contact the county court for the area where the debtor lives.

They (the county court for the area where the debtor lives)’ll advise you how to check for petitions.

When you’ve made your checks

You must confirm you’ve carried out the searches by writing a declaration - use the wording below and fill in the petition number and the name of the court if applicable.

Sign and date the declaration (a declaration) and attach it (a declaration) to your petition form.

If there’s already a petition or bankruptcy order

It’s cheaper to support an existing petition than to present your own. Notify the petitioner using the contact details on the petition.

If there’s already a bankruptcy order, you cannot continue with your petition. Register as a creditor instead.

Apply

The bankruptcy petition form you fill in depends on whether:

the debtor has not responded to a statutory demand

the sheriff or bailiff could not recover enough assets to pay the debt

You’ll also need to provide the following as part of the petition:

a statement of truth confirming the details of your petition (the petition)

a declaration that you’ve carried out searches

evidence you’re owed money

Presenting the petition

How you present the petition will depend on the debtor’s (the debtor) circumstances.

Submit the petition online if the debtor either:

lives in London and owes you £50,000 or more

has ‘no fixed abode’ (no fixed or regular address)

It (the petition)’ll go to the High Court.

Otherwise, give the petition in person to the county court nearest to where the debtor lives or works.

If the debtor owns a business

Choose the court nearest to the debtor’s (the debtor) business address unless this changed in the last 6 months and they (the debtor)’ve been at their (the debtor) home address longer.

After you apply

You’ll need to give (‘serve’) a copy of the petition to the debtor in person.

If the debtor has an individual voluntary arrangement (IVA) you’ll also need to give a copy to the supervisor.

Send the court (the High Court) a certificate of service (form N215) to confirm you’ve done this.

If your case is with the High Court you can only submit the certificate of service (a certificate of service (form N215)) online. If it’s with another court you can send it (a certificate of service (form N215)) there by post.

If you cannot serve the petition to the debtor in person

You can ask the court (the High Court) for permission to serve it (the petition) in another way, for example by post.

You’ll have to provide a certificate of service confirming you’ve used a ‘substituted service’.

Court hearing

The court (the High Court) will tell you where and when the petition will be heard. This will be at least 14 days after you served the petition to the debtor.

The debtor can oppose the petition by giving the court (the High Court) a statement of truth at least 5 days before the hearing (Court hearing).

You must list the people that you want to appear and speak at the hearing (Court hearing).

The debtor and a supervisor of an IVA can also appear and speak at the hearing (Court hearing).

At the end of the hearing (Court hearing) the court (the High Court) can:

stay (delay or stop) the petition

dismiss the petition

adjourn (postpone) the hearing (Court hearing)

make a bankruptcy order

If the court (the High Court) dismisses your petition (the petition), you’ll get your petition deposit back.

Read more about what happens after a bankruptcy order is made.

After the hearing (Court hearing)

An Official Receiver at the Insolvency Service will deal with the early stages of a bankruptcy. They will contact you within 12 weeks of the bankruptcy order being made.

Appeals

You can appeal to the court if your petition is rejected.

Check with the court where you made your petition (the High Court) (the petition) for how to appeal.


Options for paying off your debts

Overview

If you owe people money (your ‘creditors’) you can make arrangements to pay your debts. Your options depend on the amount of money and assets you have.

Where you can get help

Speak to a debt adviser to get help choosing the best way to deal with your debt.

The Money Advice Service has information about debt management and free debt advisory services.

Paying off your debts

You can pay your debts in instalments by setting up:

a Debt Management Plan which is an agreement with your creditors managed by a financial company

an Administration Order  when you’ve had a county court judgment (CCJ) or a High Court judgment (HCJ) against you for debts under £5,000

an Individual Voluntary Arrangement which is managed by an insolvency practitioner

You can also get temporary protection from your creditors through the ‘Breathing Space’ scheme, while still making repayments. You’ll need to apply through a debt advisor.

In Scotland you can arrange a Debt Payment Programme from the Debt Arrangement Scheme.

You may also have the option of reaching an informal agreement with your creditors.

If you cannot pay off your debt

You can apply for a Debt Relief Order or Bankruptcy Order if you cannot pay your debts because you do not have enough money or assets you can sell.

If you cannot pay off your debts, you can be made bankrupt.

Breathing Space (Debt Respite Scheme) (the ‘Breathing Space’ scheme)

If you live in England or Wales, you can get temporary protection from your creditors while you get debt advice and make a plan. This scheme (the ‘Breathing Space’ scheme) is called ‘Breathing Space’.

You can get temporary protection for up to 60 days.

You’ll still need to make your debt repayments.

If you get it:

enforcement action cannot be taken against you

your creditors cannot contact you about debts included in your Breathing Space (the ‘Breathing Space’ scheme)

your creditors cannot add interest or charges to your debt

If you’re getting mental health crisis treatment, your protection from creditors will be longer. It will last for the length of your treatment, plus another 30 days.

How to apply for the Breathing Space scheme (the ‘Breathing Space’ scheme)

To apply for the ‘Breathing Space’ scheme, you need to talk to a debt adviser. They will submit an application on your behalf if it’s the right thing to do.

You can find a free debt adviser on the Money Advice Service website. You can get confidential advice online, over the phone or in person.

If you’re receiving mental health treatment and cannot speak to a debt adviser, someone else can do so on your behalf.

Costs

It’s free to apply for ‘Breathing Space’, but some debt advisers may charge you a fee.

Eligibility

You must:

not have a debt relief order (DRO), an individual voluntary arrangement (IVA), an interim order, or be an undischarged bankrupt at the time you apply

not already be using the ‘Breathing Space’ scheme

not have used the ‘Breathing Space’ scheme in the last 12 months, unless it was for a mental health crisis

Debt Management Plans

A Debt Management Plan is an agreement between you and your creditors to pay all of your debts.

Debt management plans are usually used when either:

you can only afford to pay creditors a small amount each month

you have debt problems but will be able to make repayments in a few months

You can arrange a plan with your creditors yourself or through a licensed debt management company for a fee. If you arrange this with a company:

you make regular payments to the company (a company)

the company (a company) shares the money out between your creditors

The Money Advice Service has information on organisations that can give you free advice about whether a Debt Management Plan is right for you.

Get a Debt Management Plan

Set up a plan with a debt management company authorised by the Financial Conduct Authority (FCA). Search the Financial Services Register for an authorised company.

The company (a company) works out your monthly payments. You’ll have to give details about your financial situation, for example your assets, debts, income and creditors.

The company (a company) contacts your creditors and asks them (your creditors) to agree to the plan (a plan) (they (your creditors) do not have to).

Unless stated in the agreement, your creditors can still:

ask you to pay your full debt at a later date

take action to recover their (your creditors) money even if you keep up your payments

Costs

Some companies will charge:

a set up fee

a handling fee each time you make a payment

Make sure you understand the costs of your plan and how you pay for it.

Eligibility

Debt Management Plans can only be used to pay ‘unsecured’ debts, for example debts that have not been guaranteed against your property.

Your responsibilities

Your plan can be cancelled if you do not keep up your repayments.

Administration orders

An administration order (Administration orders) is a way to deal with debt if you have a county court or High Court judgment against you and you cannot pay in full.

The debt must be less than £5,000.

You make 1 payment a month to your local court. The court will divide this money between your creditors.

Creditors listed on the administration order (Administration orders) cannot take any further action against you without the court’s permission.

The Money Advice Service has information on organisations that can give you free advice about whether an administration order (Administration orders) is right for you.

Get an administration order

Fill in an application for an administration order (form N92) and return it to your local court.

The court (the court’s) decides:

how much of your debt you have to repay, for example all or just part of it (The debt)

how much your monthly repayments will be

how long the arrangement lasts

The arrangement is known as a ‘composition order’ if you cannot pay all your debts.

Costs

There’s a court fee each time you make a payment. This cannot be more than 10% of your debt.

Eligibility

You must:

owe less than £5,000, including any interest and charges

owe money to at least 2 creditors

prove you can afford regular repayments, for example by giving details of your income

have a county court or High Court judgment against you, which you cannot pay in full

Your responsibilities

You must keep up your repayments or the court (the court’s) can:

ask your employer take money from your wages – known as an ‘attachment of earnings order’

cancel the arrangement

You may still be able to keep your business running, if you have one.

Public records

Your administration order (an administration order) is added to the Register of Judgments, Orders and Fines.

It (an administration order)’s usually removed 6 years after the date the order (an administration order) was made.

Your entry is marked as ‘satisfied’ if you repay your debts in full.

You can also ask the court (the court’s) for a ‘certificate of satisfaction’. To do this, write to the court (the court’s) and send a cheque for £15 (made payable to Her Majesty’s Courts and Tribunal Service).

Individual Voluntary Arrangements

An Individual Voluntary Arrangement (IVA) is an agreement with your creditors to pay all or part of your debts. You agree to make regular payments to an insolvency practitioner, who will divide this money between your creditors.

An IVA can give you more control of your assets than bankruptcy.

The Money Advice Service has information on organisations that can give you free advice about whether an IVA is right for you.

Get an Individual Voluntary Arrangement (IVA)

Use an insolvency practitioner to get an  IVA.

Your insolvency practitioner works out what you can afford to repay and how long the IVA (an  IVA) lasts. You’ll have to give details about your financial situation, for example your assets, debts, income and creditors.

Your insolvency practitioner (an insolvency practitioner) will contact your creditors. The IVA (an  IVA) (an  IVA) will start if the creditors holding 75% of your debts agree to it (an  IVA). It (an  IVA) will apply to all your creditors, including any who disagreed to it (an  IVA).

An IVA will stop your creditors taking action against you for your debts.

Costs

There are usually 2 fees:

a set up fee

a handling fee each time you make a payment

Make sure you know how much it’s going to cost before asking an insolvency practitioner to act for you.

Your responsibilities

Your IVA can be cancelled by the insolvency practitioner if you do not keep up your repayments. The insolvency practitioner can make you bankrupt.

Public records

Your IVA will be added to the Individual Insolvency Register. It (Your IVA)’s removed 3 months after the IVA (an  IVA) ends.

Debt Relief Orders

Debt Relief Orders (DROs) are one way to deal with your debts if you owe less than £20,000, do not have much spare income and do not own your home.

If you get one:

your creditors cannot recover their money without the court’s permission

you’re usually freed (‘discharged’) from your debts after 12 months

Get a Debt Relief Order

You get a DRO from the official receiver, an officer of the bankruptcy court, but you must apply through an authorised debt adviser. They’ll help you fill in the paperwork.

There’s a list of organisations that can help you find an authorised debt adviser in the guide to DROs.

The Money Advice Service has information about where to get free debt advice.

Costs

The official receiver’s (the official receiver, an officer of the bankruptcy court) fee is £90. Your debt adviser can tell you how and when to pay it. In some cases a charity may be able to help you with the cost - ask your debt adviser.

Eligibility

You’re generally eligible if you meet all of these criteria:

you owe less than £20,000

you’ve less than £50 a month spare income

you’ve less than £1,000 worth of assets

you’ve lived or worked in England and Wales within the last 3 years

you have not applied for a DRO within the last 6 years

Restrictions

You must follow rules called ‘restrictions’ if you get a DRO.

This (follow) means you cannot:

borrow more than £500 without telling the lender about your DRO

act as the director of a company

create, manage or promote a company without the court’s permission

manage a business without telling those you do business with about your DRO

If you want to open a bank account, you may also have to tell the bank or building society about your DRO.

Check the Individual Insolvency Register to see when the restrictions (rules called ‘restrictions’) end.

The restrictions (rules called ‘restrictions’) usually last 12 months. They (rules called ‘restrictions’) can be extended if careless or dishonest behaviour caused your debt problem. For example, you lied to get credit.

The official receiver (the official receiver, an officer of the bankruptcy court) will tell you if they (rules called ‘restrictions’) should be extended. To extend them (rules called ‘restrictions’), you’ll be asked to agree to a ‘Debt Relief Restrictions Undertaking’. The court can issue a ‘Debt Relief Restrictions Order’ if you do not agree.

What you need to know

While you have a DRO you still have to pay:

your rent and bills

certain debts, for example student loans, court fines

DROs can be cancelled if:

your finances improve

you do not co-operate with the official receiver (the official receiver, an officer of the bankruptcy court) - for example you do not give them (the official receiver, an officer of the bankruptcy court) the information they (the official receiver, an officer of the bankruptcy court) ask for

If you get new debt after your DRO is approved you could:

get a bankruptcy order

be prosecuted if you do not tell new creditors about your DRO

Your DRO is added to the Individual Insolvency Register - it (your DRO)’s removed 3 months after the DRO (your DRO) ends.

Your DRO will stay on your credit record for 6 years.


If you do not pay your tax bill

Overview

If you do not pay your tax bill on time and cannot make an alternative arrangement to pay, HM Revenue and Customs (HMRC) can take ‘enforcement action’ to recover any tax you owe.

You can usually avoid enforcement action by contacting HMRC (HM Revenue and Customs (HMRC)) as soon as you know you’ve missed a tax payment or cannot pay on time.

They (HM Revenue and Customs (HMRC)) may agree to let you pay what you owe in instalments, or give you more time to pay.

Otherwise, there are a number of enforcement actions HMRC (HM Revenue and Customs (HMRC)) can take to get the tax you owe (any tax you owe). They (HM Revenue and Customs (HMRC)) can:

collect what you owe through your earnings or pension

ask debt collection agencies to collect the money

take things you own and sell them (if you live in England, Wales or Northern Ireland)

take money directly from your bank account or building society (if you live in England, Wales or Northern Ireland)

take you to court

make you bankrupt

close down your business

If you do not pay your tax on time, you’ll probably have to pay interest on the outstanding amount. You may also have to pay a penalty or surcharge.

Through your earnings or pension

HM Revenue and Customs (HMRC) can make deductions from your salary or pension for debts for:

Self Assessment tax

Class 2 National Insurance

They (HM Revenue and Customs (HMRC))’ll change your tax code to do this (make).

If you’ve been paid too much in tax credits, HMRC (HM Revenue and Customs (HMRC)) can also take back the money in this way, or by making deductions from your Universal Credit payments.

How much

HMRC (HM Revenue and Customs (HMRC)) can take up to £3,000 each tax year if you earn less than £30,000.

If you earn more than this, HMRC (HM Revenue and Customs (HMRC)) can take higher amounts depending on your salary. They (HM Revenue and Customs (HMRC)) can take up to £17,000 each tax year if you earn £90,000 or more.

When you’ll start repaying the debt

HMRC (HM Revenue and Customs (HMRC)) will write to you before making changes to your tax code.

They (HM Revenue and Customs (HMRC)) can change your code (your tax code) immediately, which means you’ll receive less money the next time you’re paid or get income from a pension.

If you’ve not repaid the debt by the end of the tax year, HMRC (HM Revenue and Customs (HMRC)) can continue to collect what you owe through next year’s tax code.

If you do not want debt included in your tax code

You’ll need to either:

pay the full amount you owe

contact HMRC (HM Revenue and Customs (HMRC)) to arrange a payment plan

Debt collection agencies

HM Revenue and Customs (HMRC) can collect your debt through a private debt collection agency.

The agency (a private debt collection agency) will write to you and you should pay them (a private debt collection agency) directly.

Debt collection agencies used by HMRC (HM Revenue and Customs (HMRC)) are:

1st Locate (trading as LCS)

Advantis Credit Ltd

Bluestone Consumer Finance Limited (trading as Bluestone Credit Management)

BPO Collections Ltd

CCS Collect (also known as Commercial Collection Services Ltd)

Moorcroft

Oriel Collections Limited

Past Due Credit Solutions (PDCS)

Taking control of goods (distraint)

If you live in England, Wales or Northern Ireland, HM Revenue and Customs (HMRC) can take things you own, and sell them to pay your debt.

This (Taking) is called ‘taking control of goods’ (or ‘distraint’ in Northern Ireland). You’ll also be charged certain fees.

What happens when HMRC (HM Revenue and Customs (HMRC)) visits

An officer from HMRC (HM Revenue and Customs (HMRC)) will visit you and ask you to pay your debt.

If you do not pay, the officer (An officer from HMRC (HM Revenue and Customs (HMRC))) will make a list of your possessions that could be sold to cover both your debt and the costs of selling them (things you own), for example fees for auctioneers or advertising.

These possessions (things you own) can then be either:

taken immediately by the officer

left with you under a ‘Controlled Goods Agreement’ (‘Walking Possession’ in Northern Ireland)

They (things you own) can be sold if you do not pay within 7 days of the visit. If they (things you own) sell for more than you owe, you’ll be paid anything over. If they (things you own) sell for less, you’ll have to pay the difference.

Enforcement action fees

England and Wales

| Flat fee | Plus

Issuing a notice of enforcement | £75 | -

Take control of goods | £235 | 7.5% of the proportion of the main debt over £1,500

Goods taken and sold at auction | £110 | 7.5% of the proportion of the main debt over £1,500

Northern Ireland

| Fee

If you owe under £100 | £12.50

If you owe more than £100 | Between 0.25 to 12.5% depending on debt amount

Goods taken and sold at auction | Between 7.5% to 15% depending on auction

From your bank or building society account

If you live in England, Wales or Northern Ireland, HM Revenue and Customs (HMRC) can take the money you owe directly from your bank or building society account. This is called ‘direct recovery of debts’.

HMRC (HM Revenue and Customs (HMRC)) will only do this (take) if you:

have repeatedly refused to pay what you owe

have received a face-to-face visit from them (HM Revenue and Customs (HMRC)) to discuss your debt

would have at least £5,000 in your account after they (HM Revenue and Customs (HMRC))’ve taken the debt (your debt)

If HMRC (HM Revenue and Customs (HMRC)) plans to take money from your account

HMRC (HM Revenue and Customs (HMRC)) will write to tell you:

what they (HM Revenue and Customs (HMRC)) plan to do

what the process will involve

how to contact them (HM Revenue and Customs (HMRC)) with any queries

Court action

If HM Revenue and Customs (HMRC) takes you to court, you may have to pay court fees and HMRC’s (HM Revenue and Customs (HMRC)) costs as well as the tax you owe.

HMRC (HM Revenue and Customs (HMRC)) can start magistrates court (Magistrates court (England, Wales and Northern Ireland)) proceedings against you if:

you have separate debts of £2,000 each or less

you’ve owed the money for under a year

You’ll get a summons before the hearing explaining what you owe and where and when the hearing will be. If you pay, you will not have to go to court.

If you disagree with the amount on the summons, you’ll need to contact HMRC (HM Revenue and Customs (HMRC)) before your case goes to court.

If you do not pay, HMRC (HM Revenue and Customs (HMRC)) can ask the court to:

send bailiffs to take and sell things that you own to cover the debt

make you bankrupt or close down your company

County court (England and Wales)

The court will write to you explaining how much you owe and what you need to do.

If you disagree with the amount you’re being asked to pay, you may need to go to court to explain why.

take the money directly from your earnings

order someone who owes you money to pay your debt

place a charge on your property

Sheriff court (Scotland)

HMRC (HM Revenue and Customs (HMRC)) will apply to the court (Sheriff court (Scotland)) for a warrant to collect your debt. You’ll have 14 days to pay from the date of the warrant.

take the money you owe directly from your pay or from your bank account

take and sell certain goods from your business premises or your property


Income Tax

Overview

Income Tax is a tax you pay on your income. You do not have to pay tax on all types of income.

This guide is also available in Welsh (Cymraeg).

You pay tax on things like:

money you earn from employment

profits you make if you’re self-employed - including from services you sell through websites or apps

some state benefits

some grants, including the Self-Employment Income Support Scheme, the Small Business Grant Fund, the Retail, Hospitality and Leisure Grant Fund, the Coronavirus Job Retention Scheme and the Test and Trace Support Payment in England (or the Self-isolation Support Payment in Scotland and the Self-isolation Support Scheme in Wales)

most pensions, including state pensions, company and personal pensions and retirement annuities

rental income (unless you’re a live-in landlord and get less than the rent a room limit)

benefits you get from your job

income from a trust

interest on savings over your savings allowance

You do not pay tax on things like:

the first £1,000 of income from self-employment - this is your ‘trading allowance’

the first £1,000 of income from property you rent (unless you’re using the Rent a Room Scheme)

income from tax-exempt accounts, like Individual Savings Accounts (ISAs) and National Savings Certificates

dividends from company shares under your dividends allowance

some state benefits

premium bond or National Lottery wins

rent you get from a lodger in your house that’s below the rent a room limit

If you only occasionally sell items or rent out property (for example through auction websites or short-term rental apps), check if you need to tell HMRC about this income.

Income Tax allowances and reliefs

Most people in the UK get a Personal Allowance of tax-free income. This is the amount of income you can have before you pay tax.

The amount of tax you pay can also be reduced by tax reliefs if you qualify for them.

How you pay Income Tax

Pay As You Earn (PAYE)

Most people pay Income Tax through PAYE. This is the system your employer or pension provider uses to take Income Tax and National Insurance contributions before they pay your wages or pension. Your tax code tells your employer how much to deduct.

Tax on state benefits

Your tax code can take account of taxable state benefits, so if you owe tax on them (for example for the State Pension) it (Tax on state benefits)’s usually taken automatically from your other income.

If the State Pension is your only income, HM Revenue and Customs (HMRC) will write to you if you owe Income Tax. You may need to fill in a Self Assessment tax return.

Self Assessment tax returns

If your financial affairs are more complex (for example you’re self-employed or have a high income) you may pay Income Tax and National Insurance through Self Assessment. You’ll need to fill in a tax return every year.

You must also fill in a tax return if you earned more than either:

£1,000 from self-employment

£2,500 from other untaxed income, for example from tips or renting out a property

Contact the Income Tax helpline if your income from renting out a property was between £1,000 and £2,500.

Tax-free and taxable state benefits

State benefits that are taxable

The most common benefits that you pay Income Tax on are:

Bereavement Allowance (previously Widow’s pension)

Carer’s Allowance

contribution-based Employment and Support Allowance (ESA)

Incapacity Benefit (from the 29th week you get it)

Jobseeker’s Allowance (JSA)

pensions paid by the Industrial Death Benefit scheme

the State Pension

Widowed Parent’s Allowance

Tax-free state benefits

The most common state benefits you do not have to pay Income Tax on are:

Attendance Allowance

Bereavement support payment

Child Benefit (income-based - use the Child Benefit tax calculator to see if you’ll have to pay tax)

Child Tax Credit

Disability Living Allowance (DLA)

free TV licence for over-75s

Guardian’s Allowance

Housing Benefit

Income Support - though you may have to pay tax on Income Support if you’re involved in a strike

income-related Employment and Support Allowance (ESA)

Industrial Injuries Benefit

lump-sum bereavement payments

Maternity Allowance

Pension Credit

Personal Independence Payment (PIP)

Severe Disablement Allowance

Universal Credit

War Widow’s Pension

Winter Fuel Payments and Christmas Bonus

Working Tax Credit

Work out if you need to pay Income Tax

To work out if you should be paying Income Tax, follow these steps.

Add up all your taxable income, including taxable state benefits.

Work out your tax-free allowances.

Take your tax-free allowances away from your taxable income (all your taxable income, including taxable state benefits).

If there’s anything left, you’re a taxpayer. Contact the Income Tax helpline if you’re not already paying tax.

If there’s nothing left, you should not be paying tax and may be due a refund.

Check you're paying the right amount

You can see if you’re paying the right amount of Income Tax online. For the current tax year (6 April 2021 to 5 April 2022), you can:

check your Income Tax payments

work out how much Income Tax you should be paying

You can also:

check how much Income Tax you paid last year (6 April 2020 to 5 April 2021)

estimate how much Income Tax you should have paid in a previous year

If you cannot use these services, you can check you’ve paid the right tax by contacting HMRC or by getting help from an accountant.

There’s a different way to change a Self Assessment tax return.


Marriage Allowance

How it works

Marriage Allowance lets you transfer £1,260 of your Personal Allowance to your husband, wife or civil partner.

This (transfer) reduces their (your husband, wife or civil partner) tax by up to £252 in the tax year (6 April to 5 April the next year).

This guide is also available in Welsh (Cymraeg).

To benefit as a couple, you (as the lower earner) must normally have an income below your Personal Allowance - this is usually £12,570.

You can calculate how much tax you could save as a couple. You should call the Income Tax helpline instead if you receive other income such as dividends, savings or benefits from your job. You can also call if you do not know what your taxable income is.

When you transfer some of your Personal Allowance to your husband, wife or civil partner you might have to pay more tax yourself, but you could still pay less as a couple.

Who can apply

You can benefit from Marriage Allowance if all the following apply:

you’re married or in a civil partnership

you do not pay Income Tax or your income is below your Personal Allowance (usually £12,570)

your partner pays Income Tax at the basic rate, which usually means their income is between £12,571 and £50,270 before they receive Marriage Allowance

You cannot claim Marriage Allowance if you’re living together but you’re not married or in a civil partnership.

If you’re in Scotland, your partner must pay the starter, basic or intermediate rate, which usually means their income is between £12,571 and £43,662.

It will not affect your application for Marriage Allowance if you or your partner:

are currently receiving a pension

live abroad - as long as you get a Personal Allowance.

If you or your partner were born before 6 April 1935, you might benefit more as a couple by applying for Married Couple’s Allowance instead.

You cannot get Marriage Allowance and Married Couple’s Allowance at the same time.

Backdating your claim

You can backdate your (your claim) claim to include any tax year since 5 April 2017 that you were eligible for Marriage Allowance.

Your partner’s tax bill will be reduced depending on the Personal Allowance rate for the years you’re backdating.

If your partner has died since 5 April 2017 you can still claim - phone the Income Tax helpline. If your partner was the lower earner, the person responsible for managing their tax affairs needs to phone.

Stopping Marriage Allowance

Your Personal Allowance will transfer automatically to your partner every year until you cancel Marriage Allowance - for example if your income changes or your relationship ends.

How to apply

It’s free to apply for Marriage Allowance.

If both of you have no income other than your wages, then the person who earns the least should make the claim.

If either of you gets other income, such as dividends or savings, you may need to work out who should claim. You can call the Income Tax helpline if you’re unsure.

Changes to your Personal Allowances will be backdated to the start of the tax year (6 April) if your application is successful.

How your Personal Allowances change

HM Revenue and Customs (HMRC) will give your partner the allowance you have transferred to them either:

by changing their (your partner) tax code - this can take up to 2 months

when they (your partner) send their (your partner) Self Assessment tax return

If your new Personal Allowance is lower than your income after you’ve made a claim, you might have to pay some income tax. However, you (both of you) might still benefit as a couple.

How your tax code will change

You and your partner will get new tax codes that reflect the transferred allowance (your partner). Your tax code will end with:

‘M’ if you are receiving the allowance (your partner)

‘N’ if you are transferring the allowance (your partner)

Your tax code will also change if you’re employed or get a pension.

If your circumstances change

You must cancel Marriage Allowance if any of the following apply:

your relationship ends - because you’ve divorced, ended (‘dissolved’) your civil partnership or legally separated

your income changes and you’re no longer eligible

you no longer want to claim

If your income changes and you’re not sure if you should still claim, call HMRC (HM Revenue and Customs (HMRC)) Marriage Allowance enquiries.

How to cancel

Either of you can cancel if your relationship has ended.

If you’re cancelling for another reason, the person who made the claim must cancel.

Online

You can cancel Marriage Allowance online. You’ll be asked to prove your identity using information HMRC (HM Revenue and Customs (HMRC)) holds about you.

By phone

Contact Marriage Allowance enquiries (HMRC (HM Revenue and Customs (HMRC)) Marriage Allowance enquiries) to cancel or get help.

After you cancel

If you cancel because of a change of income, the allowance (Marriage Allowance) will run until the end of the tax year (5 April).

If your relationship has ended, the change may be backdated to the start of the tax year (6 April).

This (backdated) might mean you or your partner underpays tax for the year (the tax year (6 April)).

If your partner dies

If your partner dies after you’ve transferred some of your Personal Allowance to them (your partner):

their (your partner) estate will be treated as having the increased Personal Allowance

your Personal Allowance will go back to the normal amount

If your partner transferred some of their Personal Allowance to you before they died:

your Personal Allowance will remain at the higher level (the normal amount) until the end of the tax year (5 April)

their (your partner) estate will be treated as having the smaller amount


Self Assessment tax returns

Overview

Self Assessment is a system HM Revenue and Customs (HMRC) uses to collect Income Tax.

Tax is usually deducted automatically from wages, pensions and savings. People and businesses with other income must report it in a tax return.

If you need to send one, you fill it in after the end of the tax year (5 April) it applies to.

This guide is also available in Welsh (Cymraeg).

Sending your return

File your tax return online or send a paper form.

If your business has been affected by coronavirus (COVID-19), you may be able to claim a grant through the Self-Employment Income Support Scheme.

Deadlines

Send your tax return by the deadline.

If you did not send an online return last year, allow extra time (up to 20 working days) as you’ll need to register first. There are different ways to register if you’re:

self-employed or a sole trader

not self-employed

registering a partner or partnership

Filling in your return

You need to keep records (for example bank statements or receipts) so you can fill in your tax return correctly.

You can get help filling in your return.

Paying your bill

HMRC (HM Revenue and Customs (HMRC)) will calculate what you owe based on what you report.

Pay your Self Assessment bill by 31 January.

How much tax you pay will depend on the Income Tax band you’re in. There’s a different rate for Capital Gains Tax if you need to pay it, for example you sell shares or a second home.

Who must send a tax return

You must send a tax return if, in the last tax year (6 April to 5 April), you were:

self-employed as a ‘sole trader’ and earned more than £1,000  (before taking off anything you can claim tax relief on)

a partner in a business partnership

You will not usually need to send a return if your only income is from your wages or pension. But you may need to send one if you have any other untaxed income, such as:

money from renting out a property

tips and commission

income from savings, investments and dividends

foreign income

Check if you need to send a tax return if you’re not sure.

Other reasons for sending a return

You can choose to fill in a tax return to:

claim some Income Tax reliefs

prove you’re self-employed, for example to claim Tax-Free Childcare or Maternity Allowance

If you get Child Benefit

If your income (or your partner’s, if you have one) was over £50,000, you may need to send a return and pay the High Income Child Benefit Charge.

Registering and sending a return

You need to register if you did not send a tax return last year. There are different ways to register if you’re:

self-employed or a sole trader

not self-employed

registering a partner or partnership

If you’re new to Self Assessment, you’ll need to keep records (for example bank statements or receipts) so you can fill in your tax return correctly.

Sending your return

Once you’ve registered, you can send your tax return (your return) online, or use commercial software or paper forms. You then have to pay your bill by the deadline.

Using commercial software or paper forms

You can send a return using commercial software or paper forms.

You must use one of these options to send returns:

for a partnership

for a trust and estate

if you get income from a trust

if you lived abroad as a non-resident

if you’re a Lloyd’s underwriter

if you’re a religious minister

to report profits made on selling or disposing of more than one asset (‘chargeable gains’)

You must use a paper form if you need to send a tax return for trustees of registered pension schemes (SA970).

The deadline for paper forms is 31 October (or 31 January if you’re a trustee of a registered pension scheme or a non-resident company).

Deadlines

HM Revenue and Customs (HMRC) must receive your tax return and any money you owe by the deadline.

The last tax year started on 6 April 2020 and ended on 5 April 2021.

Self Assessment | Deadline

Register for Self Assessment if you’re self-employed or a sole trader, not self-employed, or registering a partner or partnership | 5 October 2021

Paper tax returns | Midnight 31 October 2021

Online tax returns | Midnight 31 January 2022

Pay the tax you owe | Midnight 31 January 2022

There’s usually a second payment deadline of 31 July if you make advance payments towards your bill (known as ‘payments on account’).

You’ll usually pay a penalty if you’re late. You can appeal against a penalty if you have a reasonable excuse.

When the deadline is different

Submit your online return by 30 December if you want HMRC (HM Revenue and Customs (HMRC)) to automatically collect tax you owe from your wages and pension. You must be eligible.

HMRC (HM Revenue and Customs (HMRC)) must receive a paper tax return by 31 January if you’re a trustee of a registered pension scheme or a non-resident company. You cannot send a return online.

HMRC (HM Revenue and Customs (HMRC)) might also email or write to you giving you a different deadline.

Partnership returns if you have a company as a partner

If your partnership’s accounting date is between 1 February and 5 April and one of your partners is a limited company, the deadline for:

online returns is 12 months from the accounting date

paper returns is 9 months from the accounting date

2019 to 2020 tax year and earlier

The Self Assessment deadline for these tax years has passed. Send your tax return or payment as soon as possible - you’ll have to pay a penalty.

Penalties

You’ll get a penalty if you need to send a tax return and you miss the deadline for submitting it or paying your bill.

You’ll pay a late filing penalty of £100 if your tax return is up to 3 months late. You’ll have to pay more if it (a tax return)’s later, or if you pay your tax bill late.

You’ll be charged interest on late payments.

Estimate your penalty for Self Assessment tax returns more than 3 months late, and late payments.

You can appeal against a penalty if you have a reasonable excuse.

All partners can be charged a penalty if a partnership tax return is late.

If you need to change your return

You can make a change to your tax return (your return) after you’ve filed it (your return), for example because you made a mistake. You’ll need to make your changes by:

31 January 2022 for the 2019 to 2020 tax year

31 January 2023 for the 2020 to 2021 tax year

If you miss the deadline (the deadline for submitting it or paying your bill) or if you need to make a change to your return for any other tax year you’ll need to write to HMRC.

Your bill will be updated based on what you report. You may have to pay more tax or be able to claim a refund.

There’s a different process if you need to report foreign income.

Updating your tax return

How you update your tax return depends on how you filed it (your tax return).

Online tax returns

Sign in using your Government Gateway user ID and password.

From ‘Your tax account’, choose ’Self Assessment account’ (if you do not see this, skip this step).

Choose ‘More Self Assessment details’.

Choose ‘At a glance’ from the left-hand menu.

Choose ‘Tax return options’.

Choose the tax year for the return you want to amend.

Go into the tax return (your tax return), make the corrections and file it (your tax return) again.

Paper tax returns

Download a new tax return, and send HMRC the corrected pages. Write ‘amendment’ on each page, and include your name and Unique Taxpayer Reference (UTR) - this is on previous tax returns or letters from HMRC.

Check your Self Assessment paperwork for the address. If you cannot find this, send your corrections to the address for general Self Assessment enquiries.

If you used commercial software

Contact the software provider (commercial software) for help correcting your tax return. Contact HMRC if your software is not able to make corrections.

Write to HMRC

Write to HMRC if you need to make a change to your tax return from the 2018 to 2019 tax year or earlier.

Include in your letter:

the tax year you’re correcting

why you think you’ve paid too much or little tax

how much you think you’ve over or underpaid

You can claim a refund up to 4 years after the end of the tax year it relates to. If you’re making a claim, also include in your letter:

that you’re making a claim for ‘overpayment relief’

proof that you’d paid tax through Self Assessment for the relevant period

how you want to be repaid

that you have not previously tried to claim back this refund (a refund)

a signed declaration saying that the details you’ve given are correct and complete to the best of your knowledge

Changes to your bill

You’ll see your amended bill (your bill) straight away if you updated your tax return online. Within 3 days, your statement will also show:

the difference from the old one, so you can see whether you owe more or less tax

any interest

To view this, sign in using your Government Gateway user ID and password and choose ‘View statements’ from the left-hand menu.

If you’re owed tax

To claim a refund, go to ‘Request a repayment’ from the left-hand menu within your HMRC online account. Allow 4 weeks for your refund to be sent to your bank account.

You may not get a refund if you have tax due in the next 35 days (for example for a payment on account). Instead, the money will be deducted from the tax you owe.

If you need to pay more tax

Your updated bill will also show:

the deadline for paying

the effect on any payments on account you need to make

If you sent an updated paper return

HMRC will send you an updated bill within 4 weeks. They (HMRC)’ll also pay any refund directly into your bank account, as long as you included your bank details on tax return.

How to get help

If you need help with Self Assessment, you can:

appoint someone to fill in and send your tax return, for example an accountant, friend or relative - you can find an accountant accredited in the UK

watch videos and join webinars

contact HM Revenue and Customs (HMRC) (HMRC) for general Self Assessment enquiries

get help with your online account

Help filling in your return

There’s introductory guidance on GOV.UK to:

Capital Gains Tax if you’ve sold certain things like property or shares

expenses if you’re an employee or self-employed

Child Benefit if your income’s over £50,000

tax on income from renting property

tax on savings interest

tax returns for business partnerships

tax on income from abroad - or on your UK income if you live abroad

Guidance notes and helpsheets

You can also read guidance in:

the notes for each section of the tax return, for example ‘UK property notes’ if you’re completing that section

HMRC’s (HMRC) Self Assessment helpsheets

Returns for someone who has died

You must report a death to HM Revenue and Customs (HMRC) (HMRC) as soon as possible if you’re dealing with the tax affairs of someone who’s died.

HMRC will tell you if you need to fill in a Self Assessment tax return on the deceased’s (someone who’s died) behalf. If you do, they (HMRC)’ll send you a return form and a letter with instructions.

Contacting HMRC

If you use the Tell Us Once service you do not need to contact HMRC separately.

If you do not use the Tell Us Once service contact HMRC.

Tell HMRC the:

date of death

name and address of who to contact

You’ll also need to tell them (HMRC) one of the following for the deceased (someone who’s died):

National Insurance number

Unique Taxpayer Reference (UTR) - you can find this (National Insurance number) on letters or payslips from HMRC

full address

last employer or pension provider’s name and address

Filling in the Self Assessment tax return

The records you’ll need for the deceased’s tax return will depend on their circumstances. You’ll usually need details of the deceased’s bank and savings accounts, for example:

bank statements

building society pass books

dividend vouchers

National Savings bonds or certificates

If the deceased (the deceased’s) was employed or receiving a pension you’ll usually need:

work or pension payslips

details of any expenses paid by the employer

confirmation of any state pension

You’ll need their (the deceased’s) business records if the deceased (the deceased’s) ran their (the deceased’s) own business or rented out property.

Contact HMRC’s (HMRC) Bereavement helpline if you need help completing a return for someone who has died or if you cannot find their (the deceased’s) records.

Sending the return

Send the completed Self Assessment form by post.

The return must reach HMRC by the date given in the letter you received with the form (the completed Self Assessment form).

You can hire a professional (such as an accountant) to help you submit a tax return on behalf of the deceased.

Telling HMRC about the ‘administration period’

If you’re the executor or administrator of an estate you may also need to send information to HMRC for the ‘administration period’. This (the ‘administration period’) is the time between the day after the death and the date the estate is settled (‘distributed’).

What you need to send depends on the size of the estate (an estate), and the money that came from it (an estate) during the administration period (the ‘administration period’).

When you must send a tax return for the ‘administration period’

Fill in a trust and estate tax return if any of the following apply:

the total Income Tax and Capital Gains Tax due for the administration period (the ‘administration period’) was more than £10,000

the estate (an estate) was worth more than £2.5 million at the date of death

the date of death was before 6 April 2016 and more than £250,000 a year came from the sale of the estate’s (an estate) assets by administrators or executors

the date of death was on or after 6 April 2016 and more than £500,000 a year came from the sale of the estate’s (an estate) assets by administrators or executors

The trust and estate tax return (a trust and estate tax return) is only for the estate (an estate) - it (a trust and estate tax return)’s separate from the return you sent on behalf of the deceased (the return).

Sending the tax return

To send an estate tax return, you must first register the estate (an estate) online.

You must register by 5 October after the tax year you’re sending a return for. For example, if you’re sending a return for the 2020 to 2021 tax year (6 April 2020 to 5 April 2021) then you must register by 5 October 2021.

To register the estate you’ll need:

a Government Gateway user ID - the account needs to be registered as an organisation (you cannot use an account registered to an individual)

a National Insurance number (a temporary reference number will not work)

You’ll need a new Government Gateway user ID for each estate you register

You must register the estate online. Then you’ll get a Unique Taxpayer Reference (UTR) in the post within 15 working days (21 if you’re abroad). You’ll need it to send a tax return.

Once you’ve received your UTR (a trust and estate tax return), you can either:

fill in paper form SA900 and post it to HMRC by 31 October after the tax year it applies to

buy software to send it (a trust and estate tax return) electronically by 31 January after the tax year it (a trust and estate tax return) applies to

After you’ve sent your return (a tax return), HMRC will tell you how much the estate owes. You’ll need to pay the Self Assessment bill by the deadline.

If you do not need to send a tax return

You can make ‘informal arrangements’ instead. To do this, write to HMRC and tell them (HMRC):

the Income Tax and Capital Gains Tax due for the administration period

the name, address, National Insurance number, and UTR of the deceased

your name and contact details

Send this information to HMRC’s (HMRC) address for PAYE and Self Assessment. You must not send tax payments with this information.

You’ll be provided with a payment slip and reference number. You must use these to pay any tax that needs to be paid.


Tax on foreign income

Overview

You may need to pay UK Income Tax on your foreign income, such as:

wages if you work abroad

foreign investment income, for example dividends and savings interest

rental income on overseas property

income from pensions held overseas

Foreign income is anything from outside England, Scotland, Wales and Northern Ireland. The Channel Islands and the Isle of Man are classed as foreign.

Working out if you need to pay

Whether you need to pay depends on if you’re classed as ‘resident’ in the UK for tax.

If you’re not UK resident, you will not have to pay UK tax on your foreign income.

If you’re UK resident, you’ll normally pay tax on your foreign income. But you may not have to if your permanent home (‘domicile’) is abroad.

Reporting foreign income

If you need to pay tax, you usually report your foreign income in a Self Assessment tax return. But there’s some foreign income that’s taxed differently.

If your income is taxed in more than one country

You may be able to claim tax relief if you’re taxed in more than one country.

If you’ve not yet paid tax on the foreign income (some foreign income that’s taxed differently), you may need to apply for a certificate of residence to prove you’re eligible for relief.

UK residence and tax

Your UK residence status affects whether you need to pay tax in the UK on your foreign income.

Non-residents only pay tax on their UK (the UK) income - they do not pay UK tax on their foreign income.

Residents normally pay UK tax on all their income, whether it’s from the UK or abroad. But there are special rules for UK residents whose permanent home (‘domicile’) is abroad.

Work out your residence status

Whether you’re UK resident usually depends on how many days you spend in the UK in the tax year (6 April to 5 April the following year).

You’re automatically resident if either:

you spent 183 or more days in the UK in the tax year

your only home was in the UK - you must have owned, rented or lived in it for at least 91 days in total - and you spent at least 30 days there in the tax year

You’re automatically non-resident if either:

you spent fewer than 16 days in the UK (or 46 days if you have not been classed as UK resident for the 3 previous tax years)

you work abroad full-time (averaging at least 35 hours a week) and spent fewer than 91 days in the UK, of which no more than 30 were spent working

Get help

If your situation’s more complicated or you need to confirm your status, you can:

read HMRC’s guidance on the Statutory Residence Test

get professional tax help

Your residence status when you move

When you move in or out of the UK, the tax year is usually split into 2 - a non-resident part and a resident part. This means you only pay UK tax on foreign income based on the time you were living here.

This (pay) is called ‘split-year treatment’.

You will not get split-year treatment (pay) if you live abroad for less than a full tax year before returning to the UK. You also need to meet other conditions.

To find out if you qualify and see which split-year treatment ‘case’ you’ll need to mention on your Self Assessment tax return, you can:

read chapter 5 of HMRC’s guidance note on the Statutory Residence Test (HMRC’s guidance on the Statutory Residence Test)

contact HMRC (HMRC’s)

If your situation changes

Your status can change from one tax year to the next. Check your status if your situation changes, for example:

you spend more or less time in the UK

you buy or sell a home in the UK

you change your job

your family moves in or out of the UK, or you get married, separate or have children

Residence and capital gains

You work out your residence status for capital gains (for example, when you sell shares or a second home) the same way as you do for income.

UK residents have to pay tax on their UK and foreign gains. Non-residents have to pay tax on income, but only pay Capital Gains Tax either:

on UK property or land

if they (Non-residents) return to the UK

Residence before April 2013

There were different rules for working out your residence status before 6 April 2013.

'Non-domiciled' residents

UK residents who have their permanent home (‘domicile’) outside the UK may not have to pay UK tax on foreign income.

The same rules apply if you make any foreign capital gains, for example you sell shares or a second home.

Working out your domicile

Your domicile’s usually the country your father considered his permanent home when you were born. It (your domicile) may have changed if you moved abroad and you do not intend to return.

If you need help working out which country you’re domiciled in, you can:

read chapter 5 of HM Revenue and Customs’ (HMRC) guidance on ‘Residence, Domicile and the Remittance
Basis’

get professional tax help, for example from a tax adviser

There are additional rules for domicile and Inheritance Tax.

Tax if you’re non-domiciled

You do not pay UK tax on your foreign income or gains if both the following apply:

they (your foreign income or gains)’re less than £2,000 in the tax year

you do not bring them (your foreign income or gains) into the UK, for example by transferring them (your foreign income or gains) to a UK bank account

If this applies to you, you do not need to do anything.

Chapter 9 in HMRC’s guidance on ‘Residence, Domicile and the Remittance
Basis’ explains the rules for bringing income or gains to the UK.

If your income is £2,000 or more

You must report foreign income or gains of £2,000 or more, or any money that you bring to the UK, in a Self Assessment tax return.

You can either:

pay UK tax on them (your foreign income or gains) - you may be able to claim it back

claim the ‘remittance basis’ (the Remittance
Basis)

Claiming the remittance basis (the Remittance
Basis) means you only pay UK tax on the income or gains you bring to the UK, but you:

lose tax-free allowances for Income Tax and Capital Gains Tax (some ‘dual residents’ may keep them)

pay an annual charge if you’ve been resident of the UK for a certain amount of time

You pay an annual charge of either:

£30,000 if you’ve been here for at least 7 of the previous 9 tax years

£60,000 for at least 12 of the previous 14 tax years

Claiming the remittance basis (the Remittance
Basis) is complicated. You can:

contact HMRC (HMRC’s)

If you work in the UK and abroad

There are special rules if you work both in the UK and abroad.

You do not have to pay tax on foreign income or gains (even those you bring into the UK) if you get the ‘foreign workers’ exemption’.

You qualify if:

your income from your overseas job is less than £10,000

your other foreign income (such as bank interest) is less than £100

all your foreign income has been subject to foreign tax (even if you did not have to pay, for example because of a tax-free allowance)

your combined UK and foreign income is within the band for basic rate Income Tax

you do not need to fill in a tax return for any other reason

If you qualify, you do not need to do anything to claim.

If you’re seconded to the UK

You may be able to claim Overseas Workday Relief if your employer sends you to work in the UK on secondment.

If you qualify you:

pay UK tax on UK employment income based on the number of days you’ve worked here

do not pay tax on income from days you work abroad (as long as you do not bring it into the UK)

Ask your employer to find out if you can claim.

Foreign students

There are special rules if you come to study in the UK.

Reporting your foreign income

You usually need to fill in a Self Assessment tax return if you’re a UK resident with foreign income or capital gains. But there’s some foreign income that’s taxed differently.

You do not need to fill in a tax return if all the following apply:

your only foreign income is dividends

your total dividends - including UK dividends - are less than the £2,000 dividend allowance

you have no other income to report

Different rules may apply if your permanent home (‘domicile’) is abroad.

Register for Self Assessment

If you do not usually send a tax return, you need to register by 5 October following the tax year you had the income.

You’ll get a letter telling you what to do next after you’ve registered.

Register now

Filling in your tax return

Use the ‘foreign’ section of the tax return (your tax return) to record your overseas income or gains.

Include income that’s already been taxed abroad to get Foreign Tax Credit Relief, if you’re eligible.

HMRC has guidance on how to report your foreign income or gains in your tax return in ‘Foreign notes’.

Foreign income that's taxed differently

Most foreign income is taxed in the same way as UK income, but there are special rules for:

pensions

rent from property

certain types of employment income

Pensions

You have to pay tax on pensions if you’re resident, or were resident in any of the 5 previous tax years.

You also pay tax on any foreign pension payments, including unauthorised payments like early payments and some lump sums.

Check with your pension provider to find out how you’ll be taxed.

Rent from property

You pay tax in the normal way on overseas property. But if you rent out more than one, you can offset losses against other overseas properties.

Certain types of employment income

You usually pay tax in the normal way if you work both in the UK (UK) and abroad. There are special rules if you work:

on a ship or in the offshore gas or oil industry

for the EU or government, or as a volunteer development worker

If you're taxed twice

You may be taxed on your foreign income by the UK (UK) and by the country where your income is from.

You can usually claim tax relief to get some or all of this tax back. How you claim depends on whether your foreign income has already been taxed.

There’s a different way to claim relief if you’re a non-resident with UK income.

Apply for tax relief before you get taxed on foreign income

You have to apply for tax relief in the country your income (foreign income)’s from (the country where your income is from) if:

the income (foreign income) is exempt from foreign tax but is taxed in the UK (UK) (for example, most pensions)

required by that country’s (the country where your income is from) double-taxation agreement

Ask the foreign tax authority for a form, or apply by letter if they do not have one.

Before you apply, you must prove you’re eligible for tax relief by either:

completing the form and sending it to HMRC - they’ll confirm whether you’re resident and send the form back to you

including a UK certificate of residence, if you’re applying by letter

Once you’ve got proof, send the form or letter to the foreign tax authority.

If you’ve already paid tax on your foreign income

You can usually claim Foreign Tax Credit Relief when you report your overseas income (your foreign income) in your tax return.

How much relief you get depends on the UK’s (UK) ‘double-taxation agreement’ with the country your income’s from (the country where your income is from).

You usually still get relief even if there is not an agreement, unless the foreign tax does not correspond to UK Income Tax or Capital Gains Tax.

Contact HM Revenue and Customs  (HMRC) (HMRC) or a get professional tax help if you’re not sure, or need help with double-taxation relief.

What you’ll get back

You may not get back the full amount of foreign tax you paid. You get back less if either:

a smaller amount is set by the country’s (the country where your income is from) double-taxation agreement (that country’s (the country where your income is from) double-taxation agreement)

the income (your foreign income) would have been taxed at a lower rate in the UK (UK)

HMRC has guidance on how Foreign Tax Credit Relief is calculated, including the special rules for interest and dividends in ‘Foreign notes’.

You cannot claim this relief (Foreign Tax Credit Relief) if the UK’s (UK) double-taxation agreement (that country’s (the country where your income is from) double-taxation agreement) requires you to claim tax back from the country your income was from (the country where your income is from).

Capital Gains Tax

You’ll usually pay tax in the country where you’re resident and be exempt from tax in the country where you make the capital gain (the country where your income is from). You will not usually need to make a claim.

You have to pay Capital Gains Tax on UK residential property even if you’re not UK resident.

When to claim relief

There are different rules if your gain comes from an asset that either:

cannot be taken out of the country (the country where your income is from), such as land or a house

you’re using for business in that country (the country where your income is from)

You’ll need to pay tax in both countries and get relief from the UK (UK).

Dual residents

You can be resident in both the UK (UK) and another country. You’ll need to check the other country’s residence rules and when the tax year starts and ends.

HMRC has guidance for claiming double-taxation relief if you’re dual resident.

If you come to study in the UK (UK)

Foreign students usually do not pay UK tax on foreign income or gains, as long as they’re used for course fees or living costs like:

food

rent

bills

study materials

Check that the country your income’s from has a ‘double-taxation agreement’ that covers students.

HM Revenue and Customs (HMRC) (HMRC) may ask you to account for your living costs if they’re more than £15,000 in a tax year (excluding course fees). The tax year is from 6 April to 5 April the following year.

When you need to pay tax

You may need to pay tax on your foreign income in the normal way if you:

are from a country without a double-taxation agreement for students

have other income that you do not bring to the UK (UK)

bring it (other income that you do not bring to the UK (UK)) to the UK (UK) and spend it (other income that you do not bring to the UK (UK)) on things other than living costs and course fees

plan to stay in the UK (UK) as your permanent home (‘domicile’)

If you work in the UK (UK)

Some double-taxation agreements mean you do not pay UK tax on your income if you work while you’re a student.

If your country does not have an agreement like this, you have to pay tax in the same way as others who come to live in the UK (UK).


Tax when you get a pension

What’s taxed

You pay tax if your total annual income adds up to more than your Personal Allowance. Find out about your Personal Allowance and Income Tax rates.

Your total income could include:

the State Pension you get (either the basic State Pension or the new State Pension)

Additional State Pension

a private pension (workplace or personal) - you can take some of this tax-free

earnings from employment or self-employment

any taxable benefits you get

any other income, such as money from investments, property or savings

You may have to pay Income Tax at a higher rate if you take a large amount from a private pension. You may also owe extra tax at the end of the tax year.

If your private pensions total more than £1,073,100

You usually pay a tax charge if the total value of your private pensions is more than £1,073,100. Your pension provider will take off the charge before you get your payment.

Tax if someone inherits your pension

Other rules apply if someone inherits your State pension or your private pension.

What's tax-free

You won’t usually pay any tax if your total annual income adds up to less than your Personal Allowance.

Lump sums from your pension

You can usually take up to 25% of the amount built up in any pension as a tax-free lump sum. The tax-free lump sum doesn’t affect your Personal Allowance.

Tax is taken off the remaining amount before you get it.

When you can take your pension depends on your pension’s rules. It’s usually 55 at the earliest.

You might have to pay Income Tax at a higher rate if you take a large amount from your pension. You could also owe extra tax at the end of the tax year.

How you can take your pension

A pension worth up to £10,000

You can usually take any pension worth up to £10,000 in one go. This is called a ‘small pot’ lump sum. If you take this option, 25% is tax-free.

You can usually get:

up to 3 small pot lump sums from different personal pensions

unlimited small pot lump sums from different workplace pensions

A pension worth up to £30,000 that includes a defined benefit pension

If you have £30,000 or less in all of your private pensions, you can usually take everything you have in your defined benefit pension or defined contribution pension as a ‘trivial commutation’ lump sum. If you take this option (take), 25% is tax-free.

If this lump sum (take) is paid from more than one pension, you must:

have your savings in each scheme valued by the provider on the same day, no more than 3 months before you get the first payment

get all payments within 12 months of the first payment

If you take payments from a pension before taking the rest as a lump sum, you pay tax on the whole lump sum.

Cash from a defined contribution pension

Check with your provider about how you can take money from a defined contribution pension. You can take:

all the money built up in your pension as cash - up to 25% is tax-free

smaller cash sums from your pension - up to 25% of each sum is tax-free

You may have to pay a tax charge on money you put into your pension after you withdraw cash.

If your life expectancy is less than a year

You may be able to take all the money in your pension as a tax-free lump sum, if all of the following apply:

you’re expected to live less than a year because of serious illness

you’re under 75

you don’t have more than the lifetime allowance of £1,073,100 in pension savings

If you’re over 75 you’ll pay Income Tax on the lump sum.

Check with your pension provider. Some pension funds will keep at least 50% of your pension for your spouse or civil partner.

How your tax is paid

If you get the State Pension and a private pension

Your pension provider will take off any tax you owe before they pay you. They’ll also take off any tax you owe on your State Pension (the State Pension).

If you get payments from more than one provider (for example, from a workplace pension and a personal pension), HM Revenue and Customs (HMRC) will ask one of your providers to take the tax off your State Pension (the State Pension).

At the end of the tax year you’ll get a P60 from your pension provider showing how much tax you’ve paid.

If the State Pension is your only income

You’re responsible for paying any tax you owe. Fill in and send a Self Assessment tax return if you owe anything.

If you started getting your pension on or after 6 April 2016, don’t send a tax return. HMRC (HM Revenue and Customs (HMRC)) will write to tell you what you owe and how to pay.

If you continue to work

Your employer will take any tax due off your earnings and your State Pension (the State Pension). This is called Pay As You Earn (PAYE).

If you’re self-employed you must fill in a Self Assessment tax return at the end of the tax year. You must declare your overall income, including the State Pension and money from private pensions, for example your workplace pension.

If you have other income

You’re responsible for paying any tax you owe on income other than money from your pensions. You might have to fill in a Self Assessment tax return.

You can claim a tax refund if you’ve paid too much tax.

Tax codes

If your income only comes from one source you’ll usually have one tax code.

You can have several tax codes if you have income from more than one source.

You can get your tax code corrected if you think it’s wrong.

Tax when you live abroad

If you live abroad but are classed as a UK resident for tax purposes, you may have to pay UK tax on your pension. The amount you pay depends on your income.

If you’re not a UK resident, you don’t usually pay UK tax on your pension. But you might have to pay tax in the country you live in. There are a few exceptions - for example, UK civil service pensions will always be taxed in the UK (UK).

Double tax

If you live in a country without a ‘double taxation agreement’ with the UK (UK), you might have to pay tax in both countries.

Higher tax on unauthorised payments

You’ll pay up to 55% tax on payments from your pension provider if they make an ‘unauthorised payment’. This is a payment made outside of the government’s tax rules and usually includes:

any payments before you’re 55 (there are exceptions)

a ‘trivial commutation’ lump sum of over £30,000

regular payments into your account after you’ve died

Some companies advertise personal loans or cash advances if you take your pension early. These payments are unauthorised and you have to pay tax on them.


Voluntary National Insurance

Gaps in your National Insurance record

You may get gaps in your record (your National Insurance record) if you do not pay National Insurance or do not get National Insurance credits. This could be because you were:

employed but had low earnings

unemployed and were not claiming benefits

self-employed but did not pay contributions because of small profits

living abroad

Gaps can mean you will not have enough years of National Insurance contributions to get the full State Pension (sometimes called ‘qualifying years’).

You may be able to pay voluntary contributions to fill any gaps if you’re eligible.

Check your record (your National Insurance record) for gaps

Check your National Insurance record to find out:

if you have any gaps

if you’re eligible to pay voluntary contributions

how much it will cost

You may also be eligible for National Insurance credits if you claim benefits because you cannot work, are unemployed or caring for someone full time.

Contact HM Revenue and Customs (HMRC) if you think your National Insurance record is wrong.

Decide if you want to pay voluntary contributions

Voluntary contributions do not always increase your State Pension. Contact the Future Pension Centre to find out if you’ll benefit from voluntary contributions.

You may also want to get financial advice before you decide to make voluntary contributions.

Why you might want to pay voluntary contributions

You may want to pay voluntary contributions because:

you’re close to State Pension age and do not have enough qualifying years to get the full State Pension

you know you will not be able to get the qualifying years you need to get the full State Pension during your working life

you’re self-employed and do not have to pay Class 2 contributions because you have low profits

you live outside the UK, but you want to qualify for some benefits

Self-employed people with specific jobs

Some people do not pay Class 2 contributions through Self Assessment, but may want to pay voluntary contributions. These are:

examiners, moderators, invigilators and people who set exam questions

people who run businesses involving land or property

ministers of religion who do not receive a salary or stipend

people who make investments for themselves or others - but not as a business and without getting a fee or commission

Eligibility

You must be eligible to pay voluntary National Insurance contributions for the time that the contributions cover.

You can usually only pay for gaps in your National Insurance record from the past 6 years.

You can sometimes pay for gaps from more than 6 years ago depending on your age.

Who can pay voluntary contributions

These tables explain who’s eligible to pay Class 2 or Class 3 contributions.

Your situation | Which class to pay

Employed but earning under £120 a week and not eligible for National Insurance credits | Class 3

Self-employed with profits under £6,515 | Class 2 or Class 3 - they count towards different benefits

Both employed and self-employed, with low earnings and small profits | Contact HM Revenue and Customs (HMRC) to check if you have a gap and how much you need to pay

Self-employed as an examiner, minister of religion or in an investment or land and property business | Class 2 or Class 3 - they count towards different benefits

Living and working abroad | Class 2 - but only if you worked in the UK immediately before leaving, and you’ve previously lived in the UK for at least 3 years in a row or paid at least 3 years of contributions

Living abroad but not working | Class 3 - but only if at some point you’ve lived in the UK for at least 3 years in a row or paid at least 3 years of contributions

Unemployed and not claiming benefits | Class 3

Married woman or widow who stopped paying reduced rates | Class 3

You cannot pay voluntary contributions if:

you’re eligible for National Insurance credits

you’re a married woman or widow paying reduced rates

If you’re over State Pension age

Your situation | Which class to pay

You’ve reached State Pension age and want to fill in gaps in your National Insurance record | Class 3

Rates

The rates for the 2021 to 2022 tax year are:

£3.05 a week for Class 2

£15.40 a week for Class 3

You usually pay the current rate when you make a voluntary contribution.

If you’re a man born after 5 April 1951 or a woman born after 5 April 1953

You can pay voluntary contributions by 5 April 2023 to make up for gaps between 6 April 2006 and 5 April 2016.

You’ll pay the current rate.

When you pay different rates

If you’re paying Class 2 contributions for the previous tax year or Class 3 contributions for the previous 2 tax years, you pay the original rate for those tax years.

Call HM Revenue and Customs (HMRC) if you have questions about voluntary National Insurance.

How and when to pay

Find out how to:

pay Class 2 voluntary contributions

pay Class 3 voluntary contributions

If you’re living abroad, read leaflet NI38 and fill in form CF83 (found at the end). Send it back to HMRC (HM Revenue and Customs (HMRC)) using the address on the form.

Deadlines

You can usually pay voluntary contributions for the past 6 years. The deadline is 5 April each year.

You can sometimes pay for gaps from more than 6 years ago, depending on your age.

You’re a man born after 5 April 1951 or a woman born after 5 April 1953

You have until 5 April 2023 to pay voluntary contributions to make up for gaps between April 2006 and April 2016.