Payments on account: the January and July Self Assessment deadlines
If your Self Assessment bill is over £1,000, HMRC asks you to pay next year's tax in advance — 50% by 31 January and 50% by 31 July. Here is exactly how it works, with a worked example.
Estimate your bill with the calculator →The Self Assessment calendar
| Deadline | What is due |
|---|---|
| 5 October | Register for Self Assessment after your first year of self-employment (the tax year that ended the previous 5 April) |
| 31 October | Paper tax return deadline for the year that ended the previous 5 April |
| 31 January | Online tax return + balancing payment for the year just ended + first payment on account (50%) for the current year |
| 31 July | Second payment on account (50%) for the current year |
Miss the 31 January filing deadline and an automatic £100 penalty applies even if no tax is owed, with further penalties and interest the longer it runs.
Worked example: a £40,000 profit in the first year
Say you go self-employed and make £40,000 of profit. Your 2026/27 bill is about £7,132 (£5,486 Income Tax + £1,646 Class 4 NI).
| Date | Payment | Amount |
|---|---|---|
| 31 January | Balancing payment for the year just ended | £7,132 |
| 31 January | First payment on account (50% of bill) | £3,566 |
| 31 January | Total due | £10,698 |
| 31 July | Second payment on account | £3,566 |
That is the January shock every new sole trader hears about: £10,698 in one month, roughly 1.5× the annual bill. From the second year onwards the payments on account you have already made are credited against the new bill, and you only pay the balance.
When payments on account do not apply
- Your last Self Assessment bill was £1,000 or less.
- At least 80% of the tax you owe was already collected at source, for example through PAYE on a salary or pension.
If your income is falling you can apply to reduce the payments — via your HMRC online account or form SA303 — but under-reduce and HMRC charges interest on the difference, so base the estimate on real numbers from the self-employed tax calculator.
Budgeting so January never hurts
The reliable habit is skimming a fixed percentage of every payment into a separate savings account on the day it lands. At a £40,000 profit that is about £594 a month; check the exact figure for your profit level in the take-home by profit table. Most accounting software estimates the running bill in real time, which makes the set-aside automatic — and from April 2026, Making Tax Digital for Income Tax requires compatible software once self-employed income passes £50,000 (falling to £30,000 from April 2027).
Frequently asked questions
What are payments on account?
They are two advance payments towards next year's Self Assessment bill, each equal to 50% of the previous year's bill. One is due by 31 January (with the current year's balancing payment) and the other by 31 July.
Why is my first January tax bill so much bigger than expected?
In your first year with a bill above £1,000, the 31 January payment covers the whole bill for the year just ended plus the first 50% payment on account for the current year — effectively 150% of one year's tax in a single payment.
Who does not have to make payments on account?
You skip payments on account if your last Self Assessment bill was £1,000 or less, or if at least 80% of the tax you owe was collected at source — for example through PAYE on an employment or pension.
Can I reduce my payments on account?
Yes — if you expect the current year's bill to be lower (for example profits have fallen), you can reduce the payments through your HMRC online account or form SA303. If you reduce them too far, HMRC charges interest on the shortfall, so estimate honestly.
Do payments on account apply to student loan repayments?
No. Payments on account cover Income Tax and Class 4 National Insurance only. Student loan repayments through Self Assessment are settled in full each January with the balancing payment.