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Home › Tax glossary › Payments on account
UK tax glossaryUpdated October 2026What are payments on account?
A plain-English explanation from Cangaf's ACCA-qualified accountants, with the 2026/27 rules.
Payments on account in briefPayments on account are two advance payments towards your next Self Assessment tax bill. Each is half of your previous year's bill, due on 31 January and 31 July. They apply if your last bill was £1,000 or more, unless 80% or more of your tax was already taken at source, for example through PAYE.
Key facts
| Amount | Each payment is 50% of last year's Self Assessment bill |
| Due dates | 31 January (during the tax year) and 31 July (after it ends) |
| When they apply | Your bill was £1,000 or more and less than 80% of your tax was taken at source |
| Balancing payment | Any shortfall is due on the following 31 January |
Why the first year feels expensive
In your first year of self-employment, your first January bill includes the full tax for the year that's ended plus the first payment on account for the current year. That can mean paying 150% of a year's tax in one go.
Reducing payments on account
If you expect your income to fall, you can ask HMRC to reduce your payments on account online or with form SA303. If you reduce them too far, you'll pay interest on the difference.
Worked example
If your 2025/26 bill was £6,000, you pay £3,000 on 31 January 2027 and £3,000 on 31 July 2027 towards 2026/27. If your 2026/27 bill turns out to be £7,000, the extra £1,000 is due on 31 January 2028, along with your first payment for 2027/28.
Common questions
Do I have to make payments on account?
Only if your last Self Assessment bill was £1,000 or more and less than 80% of your tax was collected at source. Many employees with a small side income don't need them.
Can I reduce my payments on account?
Yes, if you expect lower income. You can reduce them in your HMRC online account or using form SA303. Interest is charged if the reduction turns out too big.
Do payments on account include Class 4 National Insurance?
Yes. They cover Income Tax and Class 4 National Insurance, but not Capital Gains Tax or student loan repayments.
Official guidance: Understanding payments on account (GOV.UK)
