The short answer: payments on account are advance payments towards your next Self Assessment tax bill. There are usually two a year, due by 31 January and 31 July, and each is usually half of the tax you owed for the previous year. You do not have to make them if last year’s bill was less than £1,000, or if you paid more than 80% of your tax outside Self Assessment, for example through PAYE.
What payments on account are
If you pay tax through Self Assessment, HMRC usually asks you to pay towards the next year’s bill in advance. These advance payments are called payments on account. For the self-employed they include Class 4 National Insurance as well as Income Tax.
Who has to make them
You make two payments on account each year unless either of these applies:
- the tax you owed through Self Assessment last year was less than £1,000
- you paid more than 80% of last year’s tax outside Self Assessment, for example through your tax code or because tax was deducted from your income before you received it
The dates
- 31 January: first payment on account for the current tax year, plus any balancing payment for the year before
- 31 July: second payment on account
If your payments on account were less than the tax you end up owing, you pay the difference as a balancing payment by 31 January after the end of the tax year. The balancing payment also includes anything you owe for Capital Gains Tax, and student loan repayments if you are self-employed.
Why the first January bill can be a shock
In your first year of paying through Self Assessment there are no earlier payments on account. So on 31 January you pay the whole bill for the year and the first payment on account for the next year.
| Due by | What it is for | Amount |
|---|---|---|
| 31 January 2027 | Tax for 2025 to 2026 (£4,000) plus first payment on account for 2026 to 2027 (£2,000) | £6,000 |
| 31 July 2027 | Second payment on account for 2026 to 2027 | £2,000 |
That is £6,000 in January for a £4,000 tax bill. Knowing this in advance, and setting money aside during the year, takes the shock out of it.
When your profits go up
Payments on account are based on last year, so if you earn more this year they will not cover the full bill and you pay a balancing payment the following January.
| Due by | What it is for | Amount |
|---|---|---|
| 31 January 2026 | First payment on account for 2025 to 2026 (half of £6,000) | £3,000 |
| 31 July 2026 | Second payment on account for 2025 to 2026 | £3,000 |
| 31 January 2027 | Balancing payment for 2025 to 2026 (£7,000 less £6,000 paid) plus first payment on account for 2026 to 2027 (half of £7,000) | £4,500 |
| 31 July 2027 | Second payment on account for 2026 to 2027 | £3,500 |
When your income is falling
If you expect your tax bill to be lower this year, for example because your profits have dropped, you can ask HMRC to reduce your payments on account. You can do this in your HMRC online account or on form SA303. The deadline for the claim is 31 January after the end of the tax year.
Be careful not to reduce them too far. If your bill turns out higher than the reduced payments, HMRC charges interest on the difference. We can work out a realistic figure with you before you apply.
Spreading the cost
You do not have to wait for the deadline. You can pay towards your bill in instalments, weekly or monthly, before it is due. Some people find this easier than finding a large sum twice a year.
How we help
When we prepare your Self Assessment tax return we tell you exactly what to pay and when, including your payments on account, and whether reducing them makes sense. If you are newly self-employed, we can estimate your first January bill early so it does not come as a surprise.
Sources: gov.uk, Understand your Self Assessment tax bill: payments on account; Self Assessment tax return deadlines; Self Assessment: claim to reduce payments on account (SA303). Checked 3 October 2026. The figures in the examples are made up for illustration.
Common questions
Why is my first January tax bill so high?
In your first year there are no earlier payments on account, so on 31 January you pay the full bill for the year plus the first payment on account for the next year. A bill of £4,000 can mean paying £6,000 in January.
Do I make payments on account if I am also employed?
Not if more than 80% of your tax for last year was paid outside Self Assessment, for example through your tax code. If less than that was covered, and you owed £1,000 or more through Self Assessment, you usually do.
Can I reduce my payments on account?
Yes, if you expect your tax bill to be lower, through your HMRC online account or on form SA303. If you reduce them too far, HMRC charges interest on the difference.
Do payments on account include Capital Gains Tax?
No. Capital Gains Tax, and student loan repayments if you are self-employed, are paid with the balancing payment by 31 January after the end of the tax year.
General information only, not personal advice. Tax rules, rates and thresholds change, so check gov.uk or speak to us about your own situation.