EaseMyTax

Payments on account

Payments on account: paying next year’s tax in advance, and how to change them

If your Self Assessment bill is over £1,000 and less than 80% of your tax was taken off at source, HMRC asks you to pay next year’s tax in advance in two halves: half on 31 January with this year’s bill, half on 31 July. They are based on this year’s bill, so the first year you owe one and a half years’ tax at once. They can be reduced if next year will be lower, and paid early or topped up if you want to spread the cost. This page shows the amounts and dates for your figures, what changing them does, and the online service screen by screen.

How payments on account work

1. Who has to make them

Anyone whose Income Tax and Class 4 bill for the year (after tax already deducted) is over £1,000, unless at least 80% of their tax was collected at source through PAYE. So the self-employed, partners and landlords usually do; employees with a small extra bill usually do not. Capital Gains Tax and student loan repayments are never included.

2. How much

Each payment is half of this year’s bill. HMRC assumes next year will be the same. The payments are advances towards next year, not extra tax: when next year’s return is in, they are taken off that bill and only the balance is due (or a refund if you paid too much).

3. When

The first on 31 January 2027, the same day as the balance for 2025/26; the second on 31 July 2027. The balancing payment for 2026/27, after both are taken off, is due on 31 January 2028, together with the first payment on account for the year after that.

4. Interest, not penalties

A late payment on account attracts interest from the due date, at the Bank of England base rate plus 4 percentage points, but no late-payment penalty: those apply only to the balancing payment. The same interest runs if you reduce the payments too far.

A worked example (2025/26)

Amira is self-employed and her 2025/26 return shows £4,000 of Income Tax and Class 4, with nothing deducted at source.

  1. On 31 January 2027 she pays the £4,000 for 2025/26 plus the first payment on account towards 2026/27 of £2,000.00: £6,000.00 in one go.
  2. On 31 July 2027 she pays the second payment on account of £2,000.00.
  3. By 31 January 2028 her 2026/27 return is in. She has already paid £4,000.00. If the bill is £5,000, she pays the £1,000.00 balance (plus the next first payment on account); if it is £3,000, HMRC repays £1,000.00 or sets it against the next payment.

Changing them

Reducing them: if next year will be lower

You can ask to reduce both payments to half of what you expect next year’s bill to be: online in your Self Assessment account under ‘Reduce payments on account’, or on form SA303, any time before the second payment is due. Good reasons are profits falling, stopping trading, more tax now taken at source, or a one-off item last year.

  • Saves: the difference stays in your bank until the real bill is known, instead of sitting with HMRC.
  • Costs, if you reduce too far: when the real bill turns out higher than your estimate, HMRC charges interest on the shortfall from the original due dates (31 January 2027 and 31 July 2027), as if the reduction had never been made. Reduce to an honest estimate, not the lowest figure.
  • Reduced to nil by mistake, or with no reasonable basis, can also attract a penalty. If the year turns out better, you can increase the payments again the same way.

Increasing them: paying more, or earlier

There is no form to increase payments on account: HMRC never asks for more than half of last year’s bill in advance. But if you know next year will be higher, or you would rather not face a large balance in January, you can pay more whenever you like.

  • Pay extra at any time by bank transfer with your UTR followed by K as the reference. Anything above the amounts due sits as a credit on your account and is used against the next bill.
  • A budget payment plan takes a fixed weekly or monthly Direct Debit towards your next bill. You choose the amount and can pause it; it is set up in your online account.
  • Paying early earns no interest from HMRC, so the benefit is only in spreading the cost. Keep the money in a savings account instead if you trust yourself to have it in January.
Payments on account (GOV.UK)Reduce your payments on account online (GOV.UK)Interest on late payments of Self Assessment tax (GOV.UK)Pay weekly or monthly with a budget payment plan (GOV.UK)If you cannot pay your tax bill on time (GOV.UK)

Your payments on account

Enter your bill for the year, or use the figures from your saved check. We show whether payments on account apply, each amount and date, what a lower bill next year does to them, and the online reduce service screen by screen.

Your figures

The ‘total tax due’ line on your calculation less tax taken off at source, before any payments on account you have already made. Not including Capital Gains Tax or student loan.

£

PAYE tax from your P60s. Leave blank if none. If it is 80% or more of your total tax, no payments on account are due.

£

Only if you think next year will be lower. We show what reducing the payments to match would do.

£
Enter your bill to see whether payments on account apply and how much they are.

Reduce your payments on account, screen by screen

HMRC’s online service in your Self Assessment account. Each screen is listed with what goes in it, or shown as it looks on GOV.UK.

Done online

Reduce your payments on account

Done online in your Self Assessment account (‘Reduce payments on account’), or on paper form SA303. You say what you expect next year’s bill to be, and both payments on account drop to half of it. You can do it any time before the second payment is due.

Enter your bill above and the amounts are filled in here.

Every box can be typed into, here or on the redrawn screens, and what you type stays in the box while you read the rest.

Show the pages as
Screen 1 of 3

Your current payments on account

The service shows the two payments HMRC has set, each half of last year’s bill. Check them against your statement before you change anything.

  • Section

    Current amount of each payment on account

    Half of last year’s Income Tax and Class 4 bill. Shown on your Self Assessment statement and in the service; check the two match.

    From your records
    £
  • Section

    The tax year the payments are for

    The year in progress, which the payments are advances towards, not the year of the bill they were worked out from.

    From your records
Screen 2 of 3

The reduced amount and why

Enter what you expect next year’s total bill (Income Tax and Class 4) to be; each payment on account becomes half of it. Give a reason. Reduce to an honest estimate, not the lowest figure you can get away with.

  • Section

    Reduce each payment on account to

    Half of what you expect the whole bill for the year to be. You cannot set it below zero, and setting it lower than the real bill turns out to be costs interest.

    From your records
    £
  • Section

    Why your bill will be lower

    A sentence is enough: profits have fallen, you have stopped trading, more tax is now taken at source, a one-off gain last year will not repeat.

    From your records
  • Section

    You understand that interest is charged if the reduced payments are less than the tax due

    Put X. If the real bill is higher than your estimate, interest runs on the difference from the original due dates.

    Put X
Screen 3 of 3

Declaration and submit

Read the summary, confirm the figures are correct to the best of your knowledge, and submit. Online you get a confirmation reference at once; keep it.

  • Section

    The information I have given is correct and complete to the best of my knowledge

    Put X. Online this is a tick box before the submit button.

    Put X
  • Section

    Signature and date

    On the printed form only. Online, submitting is the signature.

    From your records

What happens after you submit

The two payments on account change at once in your statement, and the amount due on 31 January and 31 July drops. When you file next year’s return, HMRC compares what you paid with the real bill: if you reduced too far, interest runs on the shortfall from the date each payment was due, so aim for an honest estimate rather than the lowest one.

Reduce your payments on account online (GOV.UK)

The same claim can be made on paper: Form SA303: claim to reduce payments on account (GOV.UK)

You can also reduce them while filling in the return, in the ‘Finishing your return’ section
The return, box by boxThe calculation at the end shows the balance and the first payment on account together.Open the walkthroughKey dates and remindersBoth payment dates for every tax year, added to your own calendar with a reminder.Set the remindersIf you cannot payTime to Pay arrangements and what interest and penalties apply.Read the explanation