If you are self-employed or have other income taxed through Self Assessment, you may be asked to make payments on account.
These are advance payments towards your next tax bill. They are usually paid in two instalments:
- 31 January
- 31 July
The July payment can catch people out because it arrives halfway through the year, long after the January deadline has faded from view.
How to prepare
Check whether payments on account apply to you
They commonly apply when your previous Self Assessment bill was more than £1,000 and less than 80% of your tax was collected at source, such as through PAYE.
Find your July amount
Log in to your HMRC online account or check your Self Assessment calculation. The amount is often half of the previous year’s tax bill, though your circumstances may differ.
Build a tax pot
Move a percentage of each payment you receive into a separate savings account. The right percentage depends on your income, expenses and tax position, but consistency is the useful engine here.
Review this year’s income
If your income has fallen significantly, you may be able to apply to reduce payments on account. Take care: reducing them too far can lead to interest if the final bill is higher.
Plan before the deadline
Set a reminder for early July, rather than 30th of July. This gives you time to check figures, move funds and ask for advice if needed.
Key date
The second Self Assessment payment on account is due by 31 July.
Need help working out your payment or setting up a calmer tax system? Get in touch.
Log into your Personal Tax account OR Make a Self Assessment payment
