Payments on Account

Explainer Video

Introduction

If your Self Assessment tax bill is £1,000 or more, you’ll usually be asked to make ‘payments on account’ towards your next year’s tax bill.

These are advance payments which are then deducted from next year’s tax bill.

You don’t need to make payments on account if:

• your last Self Assessment bill was less than £1,000, or
• you paid more than 80% of last year’s tax another way, for example through your tax code from a job

Payments on Account (POA) include your income tax and Class 4 National Insurance. Capital gains and student loan repayments aren’t included. They’re paid with your balancing payment each January.

There are 2 payments due each year, each usually half of last year’s bill. One is due when you pay your tax bill (by midnight, 31 January) and the other later in the year (by midnight, 31 July).

The idea behind these is that you’re paying your tax in advance for the next year, partly to keep you on track and avoid a large bill when you submit your next return.

Next year, when you submit your tax return, any payments on account you’ve made are taken off your bill, as you’ve pre-paid these. Whatever is left is called the balancing payment.

Example

Matt’s tax bill for the 2025/26 tax year is £2,000. It’s his first bill, so he hasn’t made any payments on account yet.

By 31 January 2027, he pays his £2,000 bill, plus his first payment on account for 2026/27 of £1,000 (half of £2,000). That’s £3,000.

By 31 July 2027, he pays his second payment on account of £1,000. He has now paid £2,000 towards his 2026/27 bill.

His 2026/27 bill turns out to be £4,000. HMRC takes away the £2,000 he has already paid, so his balancing payment is £2,000, due by 31 January 2028.

On the same day, his first payment on account for 2027/28 is due. That’s half of £4,000, so £2,000. He pays £4,000 by 31 January 2028, then £2,000 by 31 July 2028.

31 July 2027 is a Saturday. If you pay by Faster Payments or card, that’s fine. If you pay by Bacs or cheque, make sure the money reaches HMRC by Friday 30 July.

Reducing your Payments on Account

If you know your tax bill next year is going to be lower than this year (and therefore payments on account would be more than the tax bill), you can ask HMRC to reduce your payments on account.

This can be done from within your Personal Tax Account, or by completing form SA303.

Important: If you reduce your payments on account and your tax bill turns out higher, HMRC will charge you interest on the difference. If you end up paying too much, HMRC pays it back.

If you’re a MalgraBooks client, our team will discuss options with you and arrange for the relevant forms to be completed on your behalf.

Changes from April 2029

At the Budget on 28 October 2026, the government said that from April 2029, people who make payments on account will make “more regular in year payments”. The details haven’t been published yet, and it still needs to become law. Nothing changes for payments due in January or July 2027.

You can check the details on gov.uk’s payments on account page.