Payments on account explained
Payments on account are advance payments towards next year's tax bill. They catch a lot of people out in their first or second year of Self Assessment, because the January bill can suddenly be much bigger than expected.
Do you have to make them?
HMRC asks for payments on account unless either of these is true:
- your Self Assessment bill for the year (tax and Class 4 NI left after PAYE and other tax taken at source) was under £1,000, or
- more than 80% of your total tax was already taken at source, for example through PAYE on your wages.
Many employees with a small rental or side income stay under £1,000, or have most of their tax taken through PAYE, so they never have to make them.
How much and when
Each payment is half of this year's Self Assessment bill. For the 2025-26 return:
- 31 January 2027: the balance of your 2025-26 tax, plus the first payment on account for 2026-27
- 31 July 2027: the second payment on account for 2026-27
- 31 January 2028: any balance for 2026-27, once you know the real figure, plus the first payment for 2027-28
Worked example
Priya's total Income Tax and Class 4 NI for 2025-26 is £5,000. Priya's employer took £3,000 through PAYE.
| Self Assessment bill (£5,000 - £3,000) | £2,000 |
| Over £1,000? | Yes |
| Tax taken at source as a share of the total (£3,000 of £5,000) | 60%, under 80% |
| So each payment on account is half of £2,000 | £1,000 |
| Due 31 January 2027 (£2,000 + £1,000) | £3,000 |
| Due 31 July 2027 | £1,000 |
That's 150% of the year's bill in one go. It's a one-off jump: in later years the payments on account count towards the bill, so it evens out.
Reducing them
If you expect next year's income to be lower (for example the side business has stopped, or you sold the rental), you can ask HMRC to reduce your payments on account. Do it in your online account or on form SA303. If you reduce them too far, you'll pay interest on the shortfall.
Will you have payments on account? The calculator checks the £1,000 and 80% tests on your figures, and shows what's due on 31 January and 31 July.
Work out my figures - freeSources
General guidance, not tax advice.