Glossary · UK

What is Payments on Account?

Advance Self Assessment payments — two instalments due 31 January and 31 July, each 50% of the previous year's tax bill.

Full Definition

Payments on account are advance payments towards your Self Assessment tax bill, designed to spread the cost over the year. If your last Self Assessment liability was more than £1,000 and less than 80% of your tax was collected at source (e.g. via PAYE), HMRC requires two instalments: the first by 31 January (alongside any balancing payment for the prior year) and the second by 31 July. Each instalment is 50% of the previous year's total bill, including Class 4 National Insurance but excluding student loan repayments and Class 2 NI. If you expect your income to fall you can apply to reduce payments on account, but underpaying triggers interest. Any difference is settled as a balancing payment the following 31 January.