Payments on account calculator
The 31 January bill shock: in your second year of Self Assessment you pay last year's balance plus half of next year's bill in advance. Here's what to expect.
The rules
- Each payment on account is half of last year's Self Assessment bill (income tax and Class 4 NI, after tax already deducted at source).
- They're due on 31 January (during the tax year) and 31 July (after it ends).
- You don't make them if last year's bill was under £1,000, or if more than 80% of your tax was already deducted at source (for example through PAYE).
- Student loan repayments and Capital Gains Tax aren't included in payments on account.
- If your income has fallen, you can ask HMRC to reduce them in your online account. If you reduce them too far, you'll pay interest on the shortfall.
Why year two hurts
For example, if your first bill is £4,800 and you've made no payments on account yet, on 31 January you pay the £4,800 balance plus a £2,400 first payment on account for the next year: £7,200. Then another £2,400 on 31 July. Setting aside about 25–30% of profit every month avoids the shock.
Source: GOV.UK: payments on account.
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Do I have to make payments on account?
Only if last year's Self Assessment bill was £1,000 or more and less than 80% of your tax was collected at source, for example through PAYE.
Can I reduce my payments on account?
Yes. If you expect a lower bill this year, you can ask HMRC to reduce them online or with form SA303. You'll pay interest if you reduce them by too much.
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