Answers · UK 2025/26
My payments on account are too high - can I reduce them?
Yes. You can apply to reduce payments on account online via your HMRC account or form SA303 if you expect your tax bill to be lower this year. But if you reduce them below what you actually owe, HMRC charges interest (currently around 8.75%) on the shortfall from each due date.
Full answer
Payments on account are advance instalments toward next year's Self Assessment bill, each worth 50% of your previous year's tax (and Class 4 NI), due 31 January and 31 July. They kick in once your bill exceeds GBP 1,000 and less than 80% of your tax was collected at source. If your income has dropped, you can claim to reduce them. Log in to your HMRC online account, go to the Self Assessment section and select 'Reduce your payments on account', or submit form SA303. Worked example: Sumaya is a sole trader who paid GBP 9,000 tax for 2025/26, so HMRC sets two payments on account of GBP 4,500 each for 2026/27. She expects 2026/27 profit to fall sharply, with an estimated bill of only GBP 5,000. She reduces each payment to GBP 2,500. If her actual bill turns out to be GBP 5,000, she is fine. But if it is really GBP 8,000, HMRC treats the GBP 4,500 instalments as having been due all along and charges interest on the GBP 1,500 + GBP 1,500 underpaid from the original 31 January and 31 July dates. So reduce only to a realistic estimate, not optimistically. Use the self-employed tax calculator to project your liability before you decide how far to cut the instalments. Never reduce to zero unless you genuinely expect no liability. Check the rules and the SA303 process at gov.uk/understand-self-assessment-bill/payments-on-account.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.