Understand your Self Assessment tax bill
Payments on account
‘Payments on account’ are payments towards your next tax bill (including Class 4 National Insurance if you’re self-employed).
They help spread the cost of your tax by making payments in 2 instalments. Each payment is half of the tax you owed last year.
These payments are due by midnight on 31 January and 31 July.
You must make these 2 payments, unless either:
- the amount of tax you owed last year was less than £1,000
- last year you paid more than 80% of the tax you owed outside of Self Assessment (for example through your tax code or because your bank had already deducted interest on your savings)
Your Self Assessment statement or online account will show you how much they are, if you need to pay them.
How payments on account are calculated
Payments on account are calculated based on your estimated earnings (usually the amount you earned the previous year). Each payment is usually half of the tax you owed the previous year.
If you actually earn more than estimated, you may still have tax to pay on top of your payments on account. This is known as a ‘balancing payment’.
If you earn less than estimated, you may be able to claim a tax refund.
If you need to make a balancing payment
This is worked out by deducting the payments on account you’ve made from the total tax you owe.
You must make your balancing payment by midnight on 31 January the following year. This will also include anything you owe for capital gains or student loans (if you’re self-employed).
If you made payments on account last year
If you made payments on account last year, you’ll need to pay both:
- your first payment on account towards your next bill
- any balancing payment you owe (if you still have tax to pay after last year’s 2 payments on account)
Example
Your bill for the 2022 to 2023 tax year is £3,000.
Based on your 2021 to 2022 earnings, you made 2 payments of £900 each (£1,800 in total) on 31 January 2023 and 31 July 2023 towards this – these were your ‘payments on account’.
Because your payments on account did not cover the amount of tax you owed, you have to make a ‘balancing payment’.
Your amount due by midnight on 31 January 2024 is made up of:
- your ‘balancing payment’ of £1,200 for the 2022 to 2023 tax year (£3,000 minus £1,800)
- the first payment on account of £1,500 (half your 2022 to 2023 tax bill) towards your 2023 to 2024 tax bill
This means the total you will have paid is £2,700 by 31 January 2024.
You then make a second payment on account of £1,500 on 31 July 2024.
If your tax calculation for the 2023 to 2024 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 2025.
If you did not make payments on account last year
If you did not make any payments on account last year (for example, because it’s your first time filing Self Assessment) you’ll need to pay both:
- the full amount of your tax calculation
- your first payment on account towards your next bill
Example
Your bill for the 2022 to 2023 tax year is £3,000.
The total tax to pay by midnight on 31 January 2024 would be £4,500. This includes:
- your £3,000 tax bill for 2022 to 2023
- the first payment on account of £1,500 (half your 2022 to 2023 tax bill) towards your 2023 to 2024 tax bill
You then make a second payment on account of £1,500 on 31 July 2024.
If your tax bill for the 2023 to 2024 tax year is more than £3,000 (the total of your 2 payments on account), you’ll also need to make a ‘balancing payment’ by 31 January 2025 as well as your first payment on account for the next tax year.
If your total tax for the year is £3,000, the only payment you will need to make by 31 January 2025 is your first payment on account for the following tax year.
Check your payments on account
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Select the option to view your latest Self Assessment return.
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Select ‘View statements’.
You’ll then be able to see:
- payments on account you’ve already made
- payments you need to make towards your next tax calculation
If you filed a paper return, you can check the payments on account you made on your last Self Assessment Statement.
Reduce your payments on account
If you know the tax you owe is going to be lower than last year, you can ask HM Revenue and Customs (HMRC) to reduce your payments on account.
You can do this either online or by post.
You will need to include the amount you expect to make so HMRC can use this to work out your new payments on account.
To reduce your payments on account online
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Select the option to view your latest Self Assessment return.
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Select ‘Reduce payments on account’.
To reduce your payments on account by post
Send form SA303 to your tax office.
If your bill is higher than you expected
If you reduce your payments on account and your tax bill is higher than expected, you’ll be charged interest on the difference. You can check the interest rates to find out how much interest you’ll be charged.