Self Assessment Second Payment on Account: The 31 July 2026 Deadline Explained

What Is a Payment on Account, and Why 31 July?

If you're self-employed, a landlord, or otherwise file a Self Assessment return with untaxed income, HMRC doesn't wait until the end of the tax year to collect what you owe. Instead, it collects your estimated bill for the current tax year in two instalments, based on what you owed the year before:

• First payment on account: due 31 January (during the tax year it relates to)
• Second payment on account: due 31 July (after the tax year ends)

For the 2025/26 tax year, that means:

Each payment on account is calculated as half of your previous year's Self Assessment tax bill, including Class 4 National Insurance, but excluding student loan repayments and Capital Gains Tax (those are collected separately, in full, with the balancing payment).

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Who Actually Has to Pay on 31 July?

You only make payments on account if both of these apply:

1. Your Self Assessment bill for the previous tax year was more than £1,000, and
2. Less than 80% of your total tax liability was already collected through PAYE or another deduction at source.

If your prior year's bill was under £1,000, or if PAYE already covers 80%+ of what you owe (common for employees with a small side income taxed lightly), you're excluded — you simply pay your full balance by the following 31 January.

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Worked Example

Sarah is self-employed. Her 2024/25 Self Assessment bill (income tax + Class 4 NI) was £6,000.

If Sarah's actual 2025/26 bill turns out to be £7,200, she pays a balancing payment of £1,200 by 31 January 2027 — plus her first payment on account for 2026/27 (50% of £7,200 = £3,600) on the same date. That January bill can therefore be substantial: balancing payment + first payment on account together.

If her 2025/26 bill is only £5,000, she's overpaid by £1,000, which HMRC refunds or offsets against future payments.

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What Happens If You Miss the Deadline

Unlike the late-filing penalty regime (which has fixed £100+ penalties), missing a payment on account deadline doesn't trigger an automatic fixed penalty. Instead:

The safest approach is always to pay on time, even if you're disputing the amount — you can apply for a refund or reduction afterwards if you've overpaid, but you cannot reverse interest already charged for a late payment.

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How to Reduce Your Payment on Account

If your income for 2025/26 will genuinely be lower than 2024/25 — perhaps you reduced your hours, lost a client, or a rental property was sold — you can apply to reduce both payments on account.

How to do it:

1. Log into your HMRC online Self Assessment account and select "reduce payments on account", or
2. Complete form SA303 and post it to HMRC.

The risk: if you reduce your payments too aggressively and your actual 2025/26 liability turns out higher than the reduced amount, HMRC charges interest on the difference between what you should have paid (the original, unreduced payment on account) and what you actually paid — backdated to the original due date. Only reduce if you're confident income has genuinely fallen, and keep records to justify the change.

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Payment Methods and Timing

Always pay a few days before 31 July to allow for processing — a payment that arrives late due to bank delays still counts as late from HMRC's perspective.

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Payments on Account vs Your Final Tax Bill

It's worth remembering that payments on account are not a separate tax — they're prepayments towards the same 2025/26 liability that gets finalised when you file your 2025/26 return (due by 31 January 2027 online). The system exists to spread the cash-flow burden across the year rather than requiring a single lump sum, but it means self-employed people effectively pay tax up to 6 months ahead of when a comparable PAYE employee's tax is deducted.

For anyone budgeting through the year, it's sensible to set aside roughly 20-30% of profits into a separate account as you earn, so both the January and July payments are already funded when they fall due.