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Payments on account: how they work and when you can reduce them

Self Assessment

Payments on account: how they work and when you can reduce them

Payments on account are advance payments towards next year’s tax bill, and they surprise many people in their first January.

AIBy Ali ImranUpdated 2026-11-12T12:20:003 min read
Calculator and tax paperwork
In 30 seconds
  • Due if your last Self Assessment bill was over £1,000 and less than 80% was paid at source.
  • Each payment is half of last year’s bill.
  • Due on 31 January and 31 July.
  • You can reduce them if your income is falling.

Here is how they are worked out, when they are due and how to reduce them safely.

What are payments on account?

If your Self Assessment bill was more than £1,000 and less than 80% of your tax was collected at source (for example through PAYE), HMRC asks you to pay towards next year’s bill in advance. Each payment on account is half of the previous year’s Income Tax and Class 4 National Insurance. They do not include Capital Gains Tax or student loan repayments.

When they are due

  • 31 January: balancing payment for the last tax year plus the first payment on account for the current year.
  • 31 July: second payment on account.

Example: your 2025/26 bill is £6,000 and you had no payments on account. On 31 January 2027 you pay £6,000 plus a first payment on account for 2026/27 of £3,000, a total of £9,000. On 31 July 2027 you pay another £3,000.

Estimate your bill

See your likely balancing payment and payments on account.

Try the calculator

Reducing your payments on account

If you expect lower income this year, for example because you stopped trading, sold a rental property or had a quiet year, you can apply to reduce your payments through your online account or form SA303. Be careful: if you reduce them too far, HMRC charges interest on the shortfall.

The first-year shock

In your first full year of self-employment, the January payment can be 150% of a year’s tax. Putting aside 25% to 30% of your profit each month helps. For upcoming changes, see our guide to payments on account changes.

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What should I do next?

Check last year’s bill

It sets your payments on account.

Review this year

Is your income going down?

Ask us

We check whether reducing them is safe.

Frequently Asked Questions

Who has to make payments on account?

Anyone whose last Self Assessment bill was over £1,000, unless 80% or more of their tax was collected at source.

When are payments on account due?

31 January and 31 July.

Can I reduce my payments on account?

Yes, if you expect your tax to be lower. Use your online account or form SA303, but interest is charged if you reduce them too much.

Do payments on account include Capital Gains Tax?

No. They cover Income Tax and Class 4 National Insurance only.

Need help with this? Wingate Accountants offers fixed-fee online accountancy support across the UK. Call 0161 531 4179 or request a quote at wingateaccountants.co.uk.

AI

About the Author

Ali Imran
I’m Ali Imran, an accountant at Wingate Accountants. I help sole traders, landlords and directors get their returns filed early and accurately, without the last-minute panic.

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