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Why January can feel “double” — explained clearly, with no jargon.
If you’re searching “payments on account”, you’re not alone. It’s one of the most confusing parts of Self Assessment because it often makes January feel bigger than expected — especially if it’s your first time paying them.
This guide explains what payments on account are, who has to pay them, the key dates (31 January and 31 July), how they’re calculated, how to reduce them safely if your income drops, and what to do if you can’t pay.
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Payments on account are advance payments towards your next tax bill (including Class 4 National Insurance if you’re self-employed).
They’re usually paid in 2 instalments:
– First payment on account: 31 January
– Second payment on account: 31 July
Each payment is usually half of the tax you owed last year.
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HMRC says you normally have to make payments on account unless either:
– the amount of tax you owed last year was less than £1,000, OR
– you paid more than 80% of the tax you owed outside of Self Assessment (for example through your tax code).
Your Self Assessment statement or online account will show if you need to pay them.
HMRC calculates payments on account based on estimated earnings — usually using last year’s figures.
Each payment is usually half of the tax you owed last year.
If you earn more than estimated, you may still have more tax to pay on top — this is called a balancing payment.
If you earn less than estimated, you may be able to claim a refund.
January often feels bigger because you may have to pay:
– your balancing payment for the tax year that just ended (if you still owe tax), AND
– your first payment on account for the next tax year.
If it’s your first time being put on payments on account, you may need to pay:
– the full amount for the year you just filed, PLUS
– the first payment on account for the next year.
This is why planning ahead (and filing early) matters — it gives you time to budget before deadlines hit.
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A balancing payment is the difference between:
– the total tax you owe for the tax year, minus
– the payments on account you’ve already made.
HMRC says the balancing payment is due by midnight on 31 January following the tax year, and may also include amounts owed for capital gains or student loans (if you’re self-employed).
The quickest way is through your HMRC online account:
1) Sign in
2) View your latest Self Assessment return
3) Select “View statements”
You’ll be able to see what you’ve already paid and what’s due next.
If you know the tax you owe is going to be lower than last year, you can ask HMRC to reduce your payments on account.
You can apply online or by post. HMRC guidance says you must claim by 31 January after the end of the tax year.
Important warning:
If you reduce your payments on account and your final tax bill is higher than expected, HMRC can charge interest on the difference — so only reduce if you’re confident your income really will be lower.
If you can’t pay in full, HMRC may allow a “Time to Pay” arrangement in some cases.
Key point: HMRC states you cannot set up a Time to Pay arrangement until a Self Assessment return has been filed. If the amount owed is more than £30,000 (or you need longer), you may still be able to apply but you’ll need to contact HMRC directly.
The best approach is acting early — ignoring it usually makes it more expensive because penalties and interest can apply.
If you want to avoid a January shock, HMRC lets you set up a Budget Payment Plan to make weekly or monthly Direct Debit payments towards your next Self Assessment bill.
To set it up, HMRC says you must be up to date with payments from your last Self Assessment tax bill.
You can choose weekly or monthly, decide the amount, and you can pause payments for up to 6 months if needed.
This can be a simple way to keep cashflow smoother across the year.
– Forgetting the 31 July payment (and getting caught out mid-year)
– Not realising January can include a balancing payment PLUS the first payment on account
– Reducing payments on account too aggressively (then getting hit with interest later)
– Not filing early enough to plan what to set aside
– Treating payments on account like “optional” (they’re not if HMRC have set them)
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Payments on account are advance payments towards your next Self Assessment tax bill, usually paid in two instalments.
They’re due by midnight on 31 January and 31 July.
Each payment is usually half of the tax you owed last year (based on HMRC’s estimate).
January can include both your balancing payment for the year you’ve just filed and your first payment on account for the next tax year.
Usually yes, unless your last tax bill was under £1,000 or you paid more than 80% of your tax outside Self Assessment.
Yes, if you expect your income to be lower. But if you reduce too much and your bill is higher, HMRC can charge interest on the difference.
You may be able to arrange a Time to Pay plan in some cases — the key is filing your return first and acting early.
Yes. HMRC offers a Budget Payment Plan (weekly or monthly Direct Debit) to spread payments towards your next bill, if you’re up to date with your last bill.
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