PAYE vs Self-Assessment

Most employed people pay tax through PAYE automatically, while self-employed people and those with additional income must file a Self-Assessment tax return. This comparison explains both systems.

Tip: scroll the table sideways to see all columns →

Feature	PAYE	Self-Assessment
Who uses it	Employees — tax deducted automatically by employer	Self-employed; directors; those with untaxed income over £1,000; high earners (over £100,000)
When you pay	Each payday — tax deducted before you receive pay	31 January (balance due) and 31 July (payment on account)
Filing requirement	No return needed for most employees	Annual tax return (5 April year end; 31 January online deadline)
Manages multiple income sources	Only for employment income — employer notified by HMRC	Yes — rental income, dividends, capital gains, foreign income
Penalties for late filing	N/A for employees (employer penalties apply)	£100 initial penalty; further daily penalties after 3 months
National Insurance	Class 1 — deducted by employer	Class 2 (flat rate) and Class 4 (profit-based) for self-employed

You may need to do both — for example if you are employed but also have self-employment income. Register for Self-Assessment by 5 October after the relevant tax year.

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Disclaimer

The information on this page was correct at the time of writing. Amounts, thresholds, and rules may change. Always check the latest official guidance.