Freedom Isn’t Free UK Personal Finance
Self-Employed
Payments on Account: The Self-Assessment Surprise
Payments on account are two advance instalments towards next year's tax bill, each 50% of last year's tax, due on 31 January and 31 July. You make them if your last bill was over GBP 1,000 and less than 80% of your tax was collected at source. In your first profitable year this can mean up to 150% of one year's tax due at once.
Payments on account: the key facts (2026/27)
| Question | Answer |
|---|---|
| What they are | Two advance instalments towards next year's tax bill, paid in addition to settling this year's bill |
| How much each is | Half (50%) of the total tax you owed last year |
| First instalment due | 31 January, alongside the balancing payment for the year just ended |
| Second instalment due | 31 July |
| When you must make them | If your last Self Assessment bill was GBP 1,000 or more |
| When you are exempt | If your last bill was under GBP 1,000, or you paid more than 80% of your tax at source (for example through a tax code or bank interest already taxed) |
| First-year impact | Up to 150% of one year's tax on the first 31 January: the full year's bill plus the first 50% instalment |
| Balancing payment | The difference between your actual tax and the payments on account already made, settled the next 31 January |
| How to reduce them | Claim online through your HMRC account, or by posting form SA303 |
| Risk of over-reducing | If you reduce them and your real bill is higher, HMRC charges interest on the difference |