Self Assessment Payments on Account

How Payments on Account Works

Calculating the amount of Payments on Account

Your total tax due for the current year is used to calculate the Payments on Account for the following year.

For instance, if your total tax for the year is £3,080.29, HMRC will ask you to pay half of this amount towards next year's tax bill, resulting in two payments of £1,540.15 each. 

When the Payments on Account are paid

These payments are split into two instalments:

• The first instalment is due by January 31st, along with any remaining tax you owe for the current year (the balancing payment).

• The second instalment is due by July 31st.

Balancing Payments

When the next January 31st comes around, you will pay the difference between the total tax owed for that year and what you have already paid through Payments on Account. Additionally, you will make the first instalment towards the following year's tax bill. 

Adjustments and Reductions

If you anticipate that your income and tax liability for the next year will be lower, you can request HMRC to reduce your Payments on Account. However, this request is at HMRC's discretion, and they may require evidence of the expected decrease in income.
If you reduce payments on account but then don't have the expected lower income, you will have a much larger bill to pay by January than you would have, since you won't have paid anything towards it.

Example

Year 1

You have a tax liability for year 1 of £3080.29.

You will pay 2 lots of £1540.15 on account.

January 31st

You pay your tax liability of £3080.29 plus 1 payment on account of £1540.15.
Your total payment for January is £4620.44.

July 31st

You pay 1 payment on account of £1540.15.

Year 2

You have a tax liability for year 2 of £5000.

You will pay 2 lots of £2500 on account.

January 31st

You pay your tax liability of £5000 plus 1 payment on account of £2500.
You have already paid 2 x £1540.15 on account for Year 2, during Year 1.
So you have £5000 + £2500 - £3080.30 (already paid)
Your total payment for January is £4419.70.

July 31st

You pay 1 payment on account of £2500.

This process continues on each year.