Definition
Payments on account are two advance payments towards your next Self Assessment tax bill, due by 31 January and 31 July. Each is normally half of the previous year’s bill, including Class 4 National Insurance. You do not have to make them if your last Self Assessment bill was less than £1,000, or if more than 80% of your tax was already collected at source, such as through PAYE.
Worked example
Jas owed £3,000 for 2025/26 and made no payments on account for that year. By 31 January 2027 she pays the £3,000 plus a first payment on account of £1,500 for 2026/27, then another £1,500 by 31 July 2027.
If her 2026/27 bill turns out to be £3,600, she pays a £600 balancing payment by 31 January 2028, along with her first payment on account for 2027/28. Paying a full year’s balance and an advance payment together is why the first January bill under payments on account often feels large.
Reducing payments on account
If you expect your income to fall, you can ask HMRC to reduce your payments on account online or with form SA303. If the reduced payments turn out too low, HMRC charges interest on the difference.
The rules are set out in more detail in payments on account explained. SmartFiling’s Self Assessment tax return service prepares the return that sets these figures.
Related questions
- When is the Self Assessment deadline? 31 January after the tax year ends for online returns and payment, which is also when the first payment on account falls due.
- Do payments on account apply to company directors? Yes, if their personal Self Assessment bill meets the same tests. Corporation Tax paid by the company is separate.
Related terms
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Self Assessment
Self Assessment is the system HM Revenue and Customs (HMRC) uses to collect Income Tax that is not taken automatically, for example through PAYE.
Read definition -
Late payment interest
Late payment interest is the interest HM Revenue and Customs (HMRC) charges when tax is paid after its due date, including Corporation Tax, VAT and Self Assessment.
Read definition -
SA302
An SA302 is HMRC's tax calculation for a single tax year, showing the income declared on a Self Assessment return and the Income Tax worked out on it.
Read definition
