Payments on account: budgeting for your first tax bill
Checked against official guidance: 26 October 2026.
Payments on account are advance payments towards next year’s bill, including Class 4 NI. They change when cash is due; they are not an extra tax rate.
When they normally apply
HMRC normally requires two payments unless last year’s tax owed was less than £1,000, or more than 80% of the tax was paid outside Self Assessment, for example through PAYE. Each instalment is usually half the relevant previous-year bill, due on 31 January and 31 July. Capital Gains Tax and student loan repayments are excluded from payments on account.
Example: a £2,000 first Self Assessment bill for 2025/26
Assume the whole £2,000 is relevant to payments on account, you have no earlier advance payments and neither exception applies.
| Date | Payment | Amount |
|---|---|---|
| 31 January 2027 | 2025/26 balancing bill | £2,000 |
| 31 January 2027 | First advance payment for 2026/27 | £1,000 |
| 31 July 2027 | Second advance payment for 2026/27 | £1,000 |
The first January cash requirement is £3,000. The two £1,000 advances are credited against 2026/27, with any balancing difference settled later. Your HMRC statement is the authority for the amounts due.
If your income falls
You can ask HMRC to reduce payments on account if you expect a lower bill. Reducing them too far can lead to interest. The calculator does not know your previous liability or tax already paid, so its annual estimate does not decide your payments on account.
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Sources: HMRC payments on account and HMRC legal framework.