Self Assessment payments on account

The rules

First payment

31 January in the tax year (GOV.UK)

Second payment

31 July after the tax year

Each payment

Half the previous year's tax bill, including Class 4 National Insurance

Not needed if

Last year's bill was less than £1,000, or more than 80% of the tax was paid another way

Balancing payment

Due 31 January after the tax year

What the payments cover

GOV.UK describes payments on account as payments towards the next tax bill, including Class 4 National Insurance for the self-employed. Each is normally half of the previous year's bill. GOV.UK lists capital gains and, for the self-employed, student loan repayments among the amounts that go into the balancing payment.

The two tests

A client does not make payments on account if either test is met (GOV.UK):

The £1,000 test: the tax owed for the previous year was less than £1,000.

The 80% test: more than 80% of the tax owed for the previous year was paid through other means, such as the tax code or tax taken off bank interest.

For example, an employee whose tax for the year was £9,000, of which £8,000 was taken through PAYE, paid 89% another way and meets the 80% test. If PAYE had covered £7,000, which is 78%, they would make payments on account on the £2,000 balance unless the £1,000 test was met.

The balancing payment

Where the year's tax turns out higher than the payments on account made, the difference is the balancing payment, due by 31 January after the tax year. GOV.UK says it is worked out by deducting the payments on account made from the total tax owed. If the payments on account were more than the tax owed, the client is due a refund or can have it set against the next bill.

Worked example

This is GOV.UK's own example (payments on account). A client's tax bill for 2023 to 2024 was £3,000. They made payments on account of £900 on 31 January 2024 and £900 on 31 July 2024, £1,800 in total.

The balancing payment for 2023 to 2024 is £3,000 less £1,800, which is £1,200, due by 31 January 2025. On the same date the client makes the first payment on account for 2024 to 2025, half of the £3,000 bill, which is £1,500. The total due on 31 January 2025 is £2,700. The second payment on account of £1,500 follows on 31 July 2025.

The same pattern applies to the current year. For the 2026 to 2027 tax year, the payments on account fall on 31 January 2027 and 31 July 2027, and the balancing payment on 31 January 2028.

Reducing payments on account

1. Check the expected bill

   A reduction suits a client whose income has fallen, for example after a business stopped trading or a property was sold. It is based on an estimate of the current year's tax.

2. Reduce online

   GOV.UK says to sign in to the online account, view the latest Self Assessment return and select "Reduce payments on account".

3. Or reduce by post

   Send form SA303 to HMRC. It can be filled in on screen and then printed and posted.

4. Watch the interest

   GOV.UK says that if payments on account are reduced and the tax bill turns out higher than expected, interest is charged on the difference.

Questions