What are payments on account?

Payments on account are advance payments towards your next Self Assessment tax bill. You normally make two, and each one is half of last year's bill (including Class 4 National Insurance if you are self-employed).

• First payment on account: due by 31 January.
• Second payment on account: due by 31 July.
• Balancing payment: if your actual bill is higher than what you have paid, the difference is due by 31 January after the tax year ends, together with the first payment on account for the next year.

You can skip them if your last Self Assessment bill was under £1,000, or if you paid more than 80% of it outside Self Assessment, for example through your PAYE tax code.

Example: if your bill for 2025 to 2026 is £3,000, each payment on account towards 2026 to 2027 is £1,500. The first time you are asked for them, you pay your full £3,000 bill plus the first £1,500 on the same day, so £4,500 by 31 January. It is worth setting money aside in advance.

If you expect a lower bill than last year, you can ask HMRC to reduce the payments online or on form SA303. If your actual bill turns out higher than you estimated, HMRC charges interest on the shortfall.

Legislation: Taxes Management Act 1970, section 59A (payments on account of income tax).