Payments on account explained

If you complete a Self Assessment return, your January tax bill can look much bigger than you expected. Payments on account are usually the reason.

What they are

A payment on account is an advance payment towards next year's tax bill. You normally make two of them, each equal to half of your previous year's Self Assessment bill. They are due on 31 January and 31 July.

Who has to pay them

They usually apply when your last Self Assessment bill was more than £1,000 and less than 80% of your income tax was collected at source, for example through PAYE.

Why the first January bill feels so big

In the first year payments on account start, your January payment can include three things together: any balance still owed for the tax year just ended, your first payment on account for the new year, and then the second one follows in July. It adds up to more than one normal year's bill, even though you are not paying more tax overall.

How to plan for it

• Put money aside each month, based on your expected tax bill.
• Check the figure on your return before the January deadline.
• If you expect your income to be lower, you can ask HMRC to reduce your payments on account. Do this carefully, because reducing them too far can lead to interest on the shortfall.

If you are not sure what you owe or when, we can work it out with you well before the deadline.

This guide is general information, not personal advice. Rules and rates can change, so check GOV.UK or ask us about your own situation.