11 November 2026
HMRC Payments on Account Explained: Why Your Tax Bill Is Bigger Than You Expected
HMRC Payments on Account Explained: Why Your Tax Bill Is Bigger Than You Expected
Draft for Emily’s approval, not for publication.
Worried because your self assessment bill is much bigger than you expected? The usual reason is that HMRC is asking for both tax you still owe for last year and an advance payment towards this year’s bill.
Quick answer: A self assessment payment on account is an advance instalment towards your next tax bill. If you need to make them, you usually pay two instalments, each equal to half of the relevant tax bill from the previous year. They are normally due on 31 January and 31 July.
This guide explains why the bill can appear to double, how to check what you owe, how to pay your self assessment tax bill and when you may be able to ask HMRC to reduce an instalment.
Who this is for: Sole traders, freelancers and other people who complete a self assessment return, especially if you’re facing payments on account for the first time.
What is a payment on account?
A payment on account is money paid in advance towards your next self assessment bill. HMRC uses your previous year’s bill to estimate what you might owe, then usually divides that amount into two equal payments.
For self-employed people, the calculation can include Class 4 National Insurance. That’s a National Insurance contribution some self-employed people pay based on their profits.
Payments are generally required unless your previous year’s relevant tax bill was less than £1,000, or more than 80% of the tax was already paid outside self assessment, such as through PAYE. Your HMRC account or statement will show whether payments apply to you.
Why is my HMRC payment on account making the bill bigger?
It can help to think of your January bill as two separate amounts:
- A balancing payment: Any tax still outstanding for the year just ended, after deducting payments on account you have already made.
- The first payment on account: An advance instalment towards the following tax year.
The balancing payment is not a second charge for the same tax. It is the shortfall between the final bill and the advance payments you have already made.
An example
Suppose your 2025–26 self assessment bill is £4,000. You previously paid £1,500 on account in January 2026 and another £1,500 in July 2026 towards that year’s bill.
That leaves a £1,000 balancing payment. HMRC may also ask for the first instalment towards 2026–27, usually half of the relevant previous-year bill: £2,000.
| Payment due | What it covers | Example amount |
|---|---|---|
| 31 January 2027 | Remaining 2025–26 tax | £1,000 |
| 31 January 2027 | First payment on account for 2026–27 | £2,000 |
| Total due by 31 January 2027 | £3,000 | |
| 31 July 2027 | Second payment on account for 2026–27 | £2,000 |
These figures are an illustration only. Your bill depends on your own income, tax already paid and HMRC calculation.
If this is your first self assessment bill and you have not made payments on account before, the first January bill can feel particularly large: it may include the full tax bill for the year just ended plus the first advance instalment for the next year.
Dates to know
For an online return covering the 2025–26 tax year, the filing deadline is 31 January 2027. Any balancing payment and first payment on account due at the same time are also normally payable by that date. The second payment on account is usually due on 31 July 2027.
| Deadline | What it usually means |
|---|---|
| 31 January | Online return deadline, balancing payment and first payment on account |
| 31 July | Second payment on account |
The 31 October paper-return deadline for 2025–26 has already passed. Check HMRC’s self assessment deadlines and payments on account guidance for the rules that apply to your circumstances.
How to check and pay your self assessment bill
Step 1: Check your HMRC calculation
Sign in to your HMRC online account and review your latest statement. Look for payments already made, any outstanding balance, and payments on account requested for the next year. Compare the figures with your return and payment records.
Step 2: Separate the amounts
Write down the balancing payment and each payment on account as separate items. This makes it easier to see which tax year each payment relates to and avoid mistaking an advance instalment for an extra charge on last year’s income.
Step 3: Choose a payment method
HMRC lists several options on its page explaining how to pay your self assessment tax bill, including online banking, debit card and Direct Debit. Allow enough time for the payment to reach HMRC: some methods take several working days.
If you cannot pay the full amount by the deadline, contact HMRC as soon as possible to discuss your options. Paying late can lead to interest and, depending on the circumstances, penalties. Don’t assume that filing your return means your bill has been paid.
Can I reduce my payments on account?
Possibly. If you reasonably expect your next year’s tax bill to be lower, you can ask HMRC to reduce the instalments. For example, your profits may have fallen, you may have stopped trading, or more tax may be collected from another source.
You can make a request through your HMRC online account or by submitting form SA303. Base the estimate on your whole expected tax bill, not just one change in income.
Reducing instalments too far can leave you with tax to pay later, and HMRC may charge interest on the shortfall. If your income has genuinely dropped, a careful estimate can help prevent you paying more in advance than you expect to owe.
Common mistakes to avoid
- Treating the full January amount as tax for last year. Part of it may be an advance instalment for the next tax year.
- Forgetting the July payment. The second payment on account is a separate deadline, normally on 31 July.
- Reducing an instalment without checking your full-year estimate. A lower payment now can mean a larger balance and interest later.
- Leaving payment until the last minute. Some payment methods take longer to reach HMRC than others.
- Assuming payments on account apply to everyone. The £1,000 and 80% tests may mean you do not need to make them.
A calmer way to plan for the next bill
Once you know which part of the bill is a balancing payment and which part is an advance instalment, the figure is easier to plan for. Setting aside money as you earn it can also make January and July less of a surprise.
EP Associates has supported clients since 2009, with more than 500 clients and a 98% retention rate. Our team includes founder Emily Pearson, tax specialist Amy McCullough and business accounts manager Becky Hopkins, with offices in Bristol and Glastonbury.
If you’d like help checking your return or working out what to expect, we agree fixed fees upfront. Self assessment support starts at £149 for a simple return, £199 for a standard return and £299 for a complex return. We file in 3 working days, with a 50% fee refund guarantee if we miss that timeframe.
You can request a quote or get started. You can also call us on 017852291215.
Quick answers
Is a payment on account an extra tax charge?
No. It is an advance payment towards your next self assessment bill. The eventual bill is calculated from your actual income and tax position.
Why is my first self assessment bill so high?
It may include both the full tax still due for the year just ended and the first payment on account towards the following tax year.
When are payments on account due?
They are normally due by 31 January and 31 July. Check your HMRC statement for the amounts and dates that apply to you.
Can I reduce my payments on account if my income falls?
You can ask HMRC to reduce them if you reasonably expect a lower bill. Estimate your whole tax position carefully, as underpaying can lead to interest.
How can I pay my self assessment tax bill?
HMRC accepts several payment methods, including online banking and debit card. Check its payment guidance and allow time for the payment to reach HMRC.