‘Payments on account’ are advance payments towards your NEXT tax bill (including Class 4 National Insurance if you’re self-employed).
You have to make 2 payments on account every year unless:
- your last Self Assessment tax bill was less than £3,000
Each payment is half your previous year’s tax bill. Payments are due by midnight on 31 January and 31 July.
If you still have tax to pay after you’ve made your payments on account, you must make a ‘balancing payment’ by midnight on 31 January next year.
Example
Your bill for the 2021 to 2022 tax year is £3,000. You made 2 payments on account last year of £900 each (£1,800 in total).
The total tax to pay by midnight on 31 January 2022 is £2,700. This includes:
- your ‘balancing payment’ of £1,200 for the 2021 to 2022 tax year (£3,000 minus £1,800)
- the first payment on account of £1,500 (half your 2021 to 2022 tax bill) towards your 2022 to 2023 tax bill
You have to pay your second payment on account of £1,500 by midnight on 31 July 2022.
If your tax bill for the 2021 to 2022 tax year is more than £3,000 (the total of your 2 payments on account), you’ll need to make a ‘balancing payment’ by 31 January 2023.
Payments on account don’t include anything you owe for capital gains or student loans (if you’re self-employed) – you’ll pay those in your ‘balancing payment’.
Check your payments on account
See your Self Assessment statement by logging in to your online account and clicking ‘View statements’. You’ll see:
- payments on account you’ve already made
- payments you need to make towards your next tax bill
Reduce your payments on account
If you know your tax bill is going to be lower than last year, you can ask HM Revenue and Customs (HMRC) to reduce your payments on account. Either:
- log in to your online account and click ‘Reduce payments on account’
- send form SA303 to your tax office
If you overpay or underpay
You might pay the wrong amount if your tax bill is higher or lower than you expected.
If you overpay, HMRC will send you a refund.
If you underpay, you’ll be charged interest.