Self Assessment payments on account explained

What payments on account are

Payments on account are advance payments towards your next Self Assessment bill. They are based on the previous year's Income Tax and, where relevant, Class 4 National Insurance. They do not cover every item on a Self Assessment calculation, so a balancing payment can still be due.

There are normally two payments: one due by 31 January and one due by 31 July. Each payment is usually half of the tax you owed for the previous year.

When you usually have to make them

You normally need them unless your previous Self Assessment tax bill was less than £1,000, or more than 80% of the tax you owed was collected outside Self Assessment, for example through PAYE.

Your HMRC online account or Self Assessment statement should show whether payments on account are due and how much to pay.

Why the January bill can feel bigger than expected

January can include two amounts: the balancing payment for the tax year just filed, plus the first payment on account for the following tax year. If it is your first year with payments on account, this can make the January amount feel much larger than the balancing payment alone.

Can you reduce payments on account?

If you know your next tax bill will be lower, you can ask HMRC to reduce your payments on account if your expected tax bill is lower. You can do this in your online account or with form SA303. Use a realistic forecast: HMRC can charge interest if the reduced payments prove too low.

Practical planning tip

Treat payments on account as part of your cash-flow plan, not as a surprise. For landlords, sole traders and directors with dividends, a simple monthly tax reserve can make the January and July deadlines much easier to manage.

For the official rules, see GOV.UK guidance on payments on account and the official reduction guidance.