Self Assessment: Second Payment on Account Due 31 July 2026

Quick answer

If you are in Self Assessment and your 2024/25 income tax bill exceeded £1,000, you owe a second payment on account on 31 July 2026. The amount is exactly 50% of your 2024/25 SA tax liability.

Miss it and HMRC charges 7.5% interest per annum from 1 August, compounding daily. If you still haven't paid 30 days later, a 5% surcharge lands on top.

If you cannot pay, or if your 2025/26 income is lower than 2024/25, you have options — but you need to act before 31 July, not after.

What is the second payment on account?

Payments on account are HMRC's way of collecting tax in advance rather than waiting for the following January's balancing payment. There are two each year:

• First payment on account — 31 January (paid at the same time as the previous year's balancing payment)
• Second payment on account — 31 July

Each instalment equals 50% of the previous year's Self Assessment income tax. They exist so that self-employed people and those with significant non-PAYE income are paying their tax through the year, broadly like PAYE employees do.

What is included

Only Self Assessment income tax is collected via payments on account. Specifically excluded:

• Class 4 National Insurance contributions
• Student loan repayments
• Capital Gains Tax
• High Income Child Benefit Charge

All of those are settled as part of the January balancing payment.

Who has to make them

Both conditions must apply:

1. Your 2024/25 Self Assessment tax bill was more than £1,000.
2. The tax you paid under PAYE did not cover at least 80% of your total tax liability for 2024/25.

Examples:

• A self-employed sole trader with £38,000 profit and no PAYE job: almost certainly in scope.
• A PAYE employee with a small side income of £2,000: check whether the extra tax is over £1,000. If it is only £400, no payments on account apply.
• Someone whose 2024/25 SA tax was exactly £800: no payments on account — under the £1,000 threshold.

How the second payment is calculated — worked example

Scenario: Your 2024/25 Self Assessment income tax was £4,000.

That £2,000 is not a new charge invented in July — it was already shown on your January 2026 statement. The July date is simply when it falls due.

What happens at the next January

In January 2027, HMRC will calculate your actual 2025/26 tax. If it is £4,000 again, the £4,000 you paid via the two instalments covers it exactly and no balancing payment is due (though the next year's first payment on account starts the cycle again). If your 2025/26 tax turns out to be £5,000, you owe a £1,000 balancing payment in January 2027 plus the next year's first POA.

How to reduce your payment on account — SA303

If you genuinely expect your 2025/26 tax to be lower than your 2024/25 tax, you do not have to pay the full 31 July amount. You can apply to reduce it.

When this is appropriate:

• Your self-employed income has fallen this year.
• You have taken a sabbatical or maternity/paternity leave.
• You have retired or stopped a business.
• You have significantly increased your pension contributions (which reduce taxable income).

How to reduce:

1. Online — log into your Government Gateway account, go to "Self Assessment", select "Reduce my payments on account".
2. Form SA303 — downloadable from gov.uk, post to HMRC.
3. Phone — HMRC Self Assessment helpline: 0300 200 3310.

You must state the revised amount you believe you owe and your reason. HMRC does not require detailed evidence upfront, but you must act in good faith.

The risk of reducing too much

If you reduce your payment on account and your 2025/26 tax turns out to be higher than your estimate, HMRC will charge 7.5% interest on the shortfall from the original due date. There is no separate penalty — just the interest. If you are genuinely uncertain, it is safer to pay a little more and receive a refund in January than to underpay and accrue interest.

What if you can't pay?

Do not ignore the 31 July deadline. The right approach is to contact HMRC before the deadline.

Time to Pay

HMRC's Time to Pay (TTP) scheme allows you to spread the payment over monthly instalments:

• Online self-service for debts under £30,000 (takes 10–15 minutes via Government Gateway).
• Phone (0300 200 3310) for larger amounts or more complex situations.

Interest at 7.5% still accrues on the outstanding balance throughout the arrangement. But crucially, if a TTP is agreed before the deadline, the 5% late-payment surcharge does not apply.

What happens if you simply miss it

So a £2,000 payment missed entirely with no TTP arrangement could attract roughly £150 in interest in a year plus a £100 surcharge after 30 days. It adds up quickly. Call HMRC first.

How to pay by 31 July

HMRC accepts:

• Bank transfer (Faster Payments) — reference: your 10-digit UTR followed by the letter K (e.g. 1234567890K). Usually processed same day.
• Direct Debit — must be set up at least 5 working days before 31 July.
• Debit card via pay.gov.uk — no surcharge.
• HMRC mobile app.
• Open Banking link from your HMRC online account.
• Cheque — post well in advance; cheques are deemed paid on the date HMRC receives them.

Do not pay by personal credit card — HMRC does not accept them.

July 2026 calendar: what to do now

HMRC interest rate context

The 7.5% late-payment rate in 2026 is set at the Bank of England base rate (currently 4.25%) plus 2.5 percentage points. With the BoE rate at 4.25%, the late-payment rate is 6.75% — check HMRC's published rates page for the exact current figure as it updates when the base rate moves. Whatever the precise figure, it compounds daily, so weeks of delay meaningfully increase the cost.

Common mistakes in July

1. Assuming you don't owe anything because HMRC hasn't written to you. Your January statement showed the July amount. HMRC sends reminders but does not guarantee you'll receive them.
2. Waiting until late August to query the amount. By then interest is already running.
3. Paying the wrong reference. Always use your UTR + K. Misallocated payments still count as late.
4. Reducing your payment to zero when you're still trading. If your profits are similar, a zero reduction will result in interest charges.
5. Not claiming any reduction when genuinely entitled. Many taxpayers overpay in July for a year that is already going to be lower — unnecessary cashflow drain.

What's next after 31 July

• October 2026: Self Assessment returns for 2025/26 can be filed online from 6 April 2026 — earlier filing lets you know your exact bill before January.
• 31 January 2027: 2025/26 balancing payment (if any) plus first payment on account for 2026/27.

Filing your 2025/26 return early means you know exactly whether you overpaid or underpaid via the two payments on account, and any refund is processed sooner.

Sources

• HMRC: Self Assessment payments on account
• HMRC: Pay your Self Assessment tax bill
• HMRC: If you cannot pay your tax bill on time
• HMRC: Reduce your payments on account (SA303)
• HMRC: Interest rates for late and early payments