PAYE vs Self Assessment
The two systems HMRC uses to collect income tax in the UK — what each one covers, when you need both, and how the deadlines compare for 2025-26 and 2026-27.
Side-by-side comparison
| Aspect | PAYE | Self Assessment |
|---|---|---|
| Who uses it | Employees, pensioners | Self-employed, landlords, high earners, anyone with untaxed income |
| When tax is paid | Every pay period (real-time) | By 31 January after tax year + payments on account 31 Jan / 31 Jul |
| How tax is calculated | Via your tax code (e.g. 1257L) | You self-declare on the SA100 return |
| Registration | Automatic when you start a job | Register by 5 October after the tax year |
| Filing deadline | No personal deadline (employer files FPS) | 31 October paper / 31 January online |
| Late penalty | N/A (employer responsibility) | £100 automatic + £10/day after 3m + 5%/£300 at 6m and 12m |
| Higher-rate pension relief | Tax-code adjustment if HMRC asked | Claimed on SA return |
| From April 2026 | Unchanged | MTD ITSA: quarterly updates if income > £50,000 |
When you need both
If you have a salaried job and any of: a side hustle earning over £1,000, a buy-to-let, untaxed dividends over £500, capital gains over £3,000 AEA, or you cross into the High Income Child Benefit Charge, you continue on PAYE for the salary and file SA for everything else. The SA return reconciles the PAYE tax already paid against your full liability and shows any balancing payment due.
Frequently asked questions
What is the difference between PAYE and Self Assessment?
PAYE (Pay As You Earn) is the system HMRC uses to collect income tax and National Insurance from employee wages and pensions automatically — your employer or pension provider deducts tax at source. Self Assessment is the annual return system for people whose tax cannot be collected via PAYE: self-employed, landlords, high earners, and people with significant untaxed income. Many people use both — PAYE for their salary, SA for side income.
Who has to do Self Assessment in addition to PAYE?
Anyone meeting one of these criteria, even if they also have a PAYE job: self-employment income over £1,000, rental income over £2,500 net, total income over £150,000, untaxed dividends over £500, untaxed savings interest over £10,000, foreign income over £300, capital gains above the £3,000 AEA, or the High Income Child Benefit Charge applies. Use the official HMRC checker to confirm.
When are PAYE and Self Assessment deadlines?
PAYE is collected continuously each pay period — there is no annual deadline for employees, although employers file an FPS in real time. Self Assessment for 2025-26 (year ended 5 April 2026): register by 5 October 2026, paper return by 31 October 2026, online return by 31 January 2027, and pay any tax owed by the same online deadline. Late filing is £100 automatic.
If I'm on PAYE, why might I owe extra tax?
PAYE is calculated against an estimate of your annual income via your tax code. It can underestimate when you have a second job (BR/D0 codes), benefits in kind not yet on the code, untaxed savings interest, dividends above £500, or you start drawing pension. HMRC reconciles via a P800 letter or by adjusting next year's code. If amounts are large, you must register for Self Assessment.
What is Payment on Account in Self Assessment?
If your previous SA bill was over £1,000 and less than 80% of tax was at source, HMRC asks for two payments on account: 31 January and 31 July. Each is half of last year's liability and counts towards the current year. PAYE has no equivalent — your tax is collected each pay period.
Can I leave Self Assessment once I no longer need it?
Yes. If you stop self-employment, sell the rental property, or your circumstances no longer trigger any SA criterion, call HMRC on 0300 200 3310 or use the Personal Tax Account to ask for the SA notice to be withdrawn. You must still file the year you exited, then PAYE alone resumes.
How does Making Tax Digital change PAYE vs SA from 2026?
MTD for Income Tax from April 2026 affects SA only — sole traders and landlords with combined gross income over £50,000 keep digital records and file quarterly updates. PAYE is unchanged. Threshold drops to £30,000 in April 2027 and £20,000 in April 2028.
Can I claim tax-relief on pension contributions under PAYE without doing SA?
Workplace schemes (relief at source or net pay arrangement) handle basic-rate relief automatically through PAYE. Higher and additional-rate relief on personal-pension contributions normally requires Self Assessment, although HMRC may give it through a tax-code adjustment for smaller, regular contributions if you call them.
Try the relevant calculators
- UK Take-Home Pay Calculator — see PAYE deductions on a salary
- Self Assessment Checker — find out if SA applies to you
- Self-Employment Tax Calculator — Class 2 + 4 NI plus income tax
- Payment on Account Calculator — model your 31 Jan / 31 Jul instalments
- Self Assessment Penalty Calculator — see what late filing costs
Related Calculators
Invoice Generator
UK invoice or VAT invoice with line items, VAT and payment details.
Self-Employed Deduction Wizard
Occupation-aware allowable expenses checklist with simplified mileage, use-of-home flat rates, and trading allowance comparison.
Self Assessment Payment on Account Calculator
Work out your 31 January and 31 July POAs, claim a reduction via SA303, and model late-payment interest and penalties.