Payments on account are advance instalments towards your next Self Assessment tax bill. This guide explains when they apply and how they're calculated.
Published July 2026 · Updated July 2026
Payments on account are HMRC's way of collecting tax in advance from Self Assessment taxpayers. Rather than paying a full year's tax in one go, you pre-pay towards the next year in two instalments.
If your tax bill is over £1,000, HMRC asks for two payments on account, each 50% of last year's bill, due 31 January and 31 July. They are then set against your actual bill, with any balance paid (or refunded) the following January. In your first year this can make the January payment feel unexpectedly large.
Yes, if you expect your income to fall you can ask HMRC to reduce them, but under-paying deliberately can lead to interest.
Because it includes both the tax owed and the first payment on account for the next year.
Source: GOV.UK ↗. This glossary is written for small business owners, so definitions are simplified. Tax rates and thresholds reflect 2026/27 UK rules and change over time. Berified does not provide accounting, tax or legal advice; always check the source or a qualified adviser.