Self Assessment Payments on Account Explained

When payments on account apply, how January and July bills are built, and what a first Self Assessment year means.

Reviewed against official HMRC guidance

Tax year
2026/27
Last reviewed
August 2026
Reading time
9 min

What payments on account are

Who this guide is for: For Self Assessment filers planning January and July cash flow — especially in a first filing year.

If you file a Self Assessment tax return and your bill is large enough, HMRC asks for payments on account — advance payments towards the following tax year. They are not an additional tax charge.

Compact payment timeline

Each payment on account is normally 50% of the previous year's relevant liability. The first is due by 31 January and the second by 31 July.

  1. Step 131 January — balancing payment and first payment on account
  2. Step 231 July — second payment on account
  3. Step 3Next 31 January — next balancing payment and next first payment on account
Dates follow the Self Assessment calendar after the tax year ends.

Balancing payment versus payments on account

  • Balancing payment — what remains of the completed year's bill after tax already deducted and any instalments already made.
  • First payment on account — an advance towards the following year, normally due by 31 January.
  • Second payment on account — the matching advance instalment, normally due by 31 July.

Worked example

Self Assessment liability of £4,500.00

Tax year 2026/27 · first Self Assessment year · Income Tax £3,600.00 and Class 4 £900.00 · no tax deducted at source · from calculatePaymentsOnAccount.

Self Assessment liability of £4,500.00
Balancing liability£4,500.00
First payment on account£2,250.00
January total (key figure)£6,750.00
Second payment on account in July£2,250.00

This does not mean every first-time filer automatically pays 150% of their bill. Payments on account only arise when the threshold and collected-at-source tests are met.

Student-loan and Class 2 amounts (where due) sit with the balancing payment, not inside the payments-on-account basis.

Can I reduce my payments on account?

If you expect next year's Income Tax and Class 4 liability to be lower, you can ask HMRC to reduce instalments. Keep workings that support the estimate — for example lower turnover, higher expenses or a change in other income.

If you reduce too far and the final bill is higher, interest can apply on the shortfall from the original due dates.

Plan January cash flow with the calculator's first-year view Use the Self-Employed Tax Calculator

For how Class 4 feeds the bill, see National Insurance for Sole Traders.

Frequently asked questions

Why is my first January payment so high?

When payments on account apply, January often combines the balancing payment for the completed year with the first advance instalment for the next year. That cash-flow double hit is not double taxation.

Can I reduce it?

If you expect next year's liability to be lower, you can ask HMRC to reduce payments on account. Keep evidence for your estimate — if you reduce too far, interest can apply on the shortfall.

Do student-loan repayments form part of it?

Student-loan amounts due through Self Assessment are collected with the balancing payment. They are not included in the Income Tax and Class 4 basis used to calculate payments on account.

Does every first-time Self Assessment filer pay 150% in January?

No. Payments on account only apply when your relevant liability exceeds £1,000 and you are not excluded because more than 80% of the tax was collected outside Self Assessment. When they do apply, January can feel like 150% because you pay the balancing liability plus the first advance instalment.

Official sources

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This guide is for general information only. It is not tax, legal or financial advice. Always check the official guidance for your situation.