Payment on account
UK tax glossary · Last reviewed: April 2026
If your Self Assessment bill exceeds £1,000 (and less than 80% was collected at source), HMRC requires two payments on account — 31 January and 31 July — each equal to half the previous year's liability.
New freelancers are often surprised by a January bill that combines balancing payment for the previous year plus the first instalment for the current year — effectively 150% of one year's tax in one payment.
If your income has fallen significantly, you can apply to reduce payments on account via your Personal Tax Account. Be careful: if actual liability is higher, interest runs from the original due date.
Worked example
Self Assessment bill for 2025/26: £6,000. First payment on account due 31 January 2027: £3,000. Second due 31 July 2027: £3,000. Balancing payment (if 2026/27 bill exceeds £6,000) due 31 January 2028.
Common questions
Do payments on account apply in my first year of self-employment?
Not exactly — your first SA deadline is 31 January following the year you registered. But if your first bill exceeds £1,000, HMRC will ask for first-year payments on account at the same time.
Can I reduce my payments on account if I earned less this year?
Yes. Log into your Personal Tax Account or submit form SA303 to request a reduction. Make sure you have a realistic estimate of your current-year profit before applying.
TaxHelper provides general information based on published HMRC rates and guidance. It is not regulated financial or tax advice. For decisions involving significant sums, complex circumstances, or if you are unsure, speak to a qualified accountant or HMRC directly.