Payment on Account Calculator, 2026/27

How this is calculated

Payments on account are HMRC's way of collecting tax in advance where a significant part of your income is not taxed at source, typically self-employment or rental profits. Each payment is set at 50% of your relevant amount from the prior year, meaning the total self-assessment liability, including Class 4 National Insurance, after deducting any tax already collected through PAYE or other means.

The first payment on account is due on 31 January in the tax year it relates to, alongside the balancing payment for the year before. The second is due the following 31 July. A further balancing payment then settles the difference between what was actually owed for the year and what the two payments on account already covered.

You are exempt from payments on account if the relevant amount was under £1,000, or if more than 80% of your total tax liability was already collected at source.

Why this catches people out

A director or contractor filing self-assessment for the first time often does not expect the January bill to include both the balancing payment for the year just ended and the first payment on account for the current year, which can be one and a half times the actual liability just calculated.

This is purely a cash flow timing issue rather than extra tax, but it needs planning for, particularly in the first year of self-employment or after a large one-off increase in profit.

Reducing payments on account

If you expect this year's income to be lower than last year's, you can apply to reduce your payments on account, either online or on the return itself. Reducing them too far when income actually stays high triggers interest on the shortfall, so this should be done on a realistic forecast.

Keeping a running estimate of profit through the year, rather than waiting until the filing deadline, makes it much easier to judge whether a reduction is justified.

When are payments on account due?

The first is due on 31 January within the tax year, alongside any balancing payment for the previous year. The second is due the following 31 July.

Can I avoid making payments on account?

Only if your relevant amount was under £1,000, or over 80% of your tax was already collected at source, for example through PAYE on a main employment.

What happens if I reduce my payments on account too much?

HMRC charges interest on the shortfall between what you paid and what should have been paid, calculated from the original due date, so reductions should be based on a realistic estimate of the current year's profit.

Are payments on account extra tax?

No, they are advance instalments towards the same year's eventual liability. The following January's balancing payment adjusts for any difference between the estimate and the actual result.