A Direct Debit (DD) payment is an order you provide to your bank. It notifies them that you have given permission for a business to withdraw funds from your account. The money is instantly taken out.
They are solely used by companies to set up recurring payments, in contrast to standing orders. For example, you wouldn’t pay your friend’s portion of the rent each month using a Direct Debit. Rather, you would pay the utility providers directly with it.
A firm is required to notify you in advance if they plan to alter the amount or date of payment collection. Additionally, you will need to cancel your Direct Debit account with both your bank and the company you originally set up the payment with if you choose to stop paying it.
Can Direct Debit be used for Self Assessment by UK taxpayers? #
- You certainly can. Here’s how to do it:
- To set up a direct debit for any individual tax bill payments that you need to make before January 31st, go onto your HMRC Online account.
- Before July 31st, you have the option to schedule another debit if you need to make a payment on account.
- Every time you owe money, you’ll have to set up these instructions for a single payment. Recognise that the sum will vary every time.
Points to Remember #
- Your payment reference, which is your 10-digit UTR number preceded by the letter “K,” must be used.
- A Direct Debit may take up to five working days to process the first time, and then it takes three working days the following time.
- Three working days prior to the scheduled deduction, you should cancel your direct debit.
You may easily set up a Direct Debit to pay your tax due by visiting HMRC’s website and following the instructions there.