Self-Assessment Tax Bill Details
📊 Payment Schedule Breakdown
Payments on Account are advance payments towards your next UK Self Assessment tax bill.
Under Section 59A Taxes Management Act 1970, if your previous year’s Income Tax and Class 4 National Insurance bill exceeds £1,000, HMRC legally requires you to pay two equal 50% advance instalments toward your upcoming tax year.
⚙️ Statutory Payments on Account Rules for 2026/27
1. The 50% Instalment Structure & Deadlines
- 1st Payment on Account (Due 31 January): Equal to 50% of your previous tax year’s total Income Tax and Class 4 NI bill.
- 2nd Payment on Account (Due 31 July): Equal to 50% of your previous tax year’s total Income Tax and Class 4 NI bill.
- Example: A tax bill of £6,000 for the 2025/26 tax year requires a 1st POA of £3,000.00 on 31 Jan 2027 and a 2nd POA of £3,000.00 on 31 July 2027.
2. Statutory Exemptions from Payments on Account
You do NOT need to make Payments on Account if EITHER:
- Your total Self Assessment tax bill for the previous tax year was less than £1,000.
- You already paid more than 80% of your total tax bill at source (e.g. through employer PAYE salary deductions or tax withheld on interest).
📊 Practical Payments on Account Worked Examples
Below are two worked calculation examples illustrating POA payment schedules:
- 2025/26 Balancing Tax Bill: **£6,000.00**
- 1st Payment on Account for 2026/27 (50%): **£3,000.00** (Due 31 Jan 2027)
- 2nd Payment on Account for 2026/27 (50%): **£3,000.00** (Due 31 July 2027)
Calculation: Total cash due on 31 January 2027 = £6,000 (balancing tax) + £3,000 (1st POA) = £9,000.00.
- Total Tax Bill: **£800.00**
- Payments on Account: **£0.00** (Exempt as bill is under £1,000)
Calculation: Landlord pays £800.00 on 31 January. No July payment is required.
📑 Common Pitfalls & POA Warnings
- First-Year Cash Shock: New sole traders are frequently shocked on 31 January when they realize they must pay 150% of their annual tax bill (100% balancing tax + 50% advance POA) in one lump sum.
- Reducing POA Too Far: If you expect your profits to drop, you can apply online on GOV.UK to reduce your Payments on Account. However, if your actual income turns out higher than your reduced estimate, HMRC will charge late payment interest backdated to the payment dates.
- Missing the 31 July Deadline: Many taxpayers remember 31 January but forget the 31 July 2nd Payment on Account deadline, incurring HMRC late payment interest charges.
❓ Frequently Asked Questions (FAQ)
The two advance payments made on 31 January and 31 July are credited directly against your upcoming tax return. On the following 31 January, you only pay any remaining balancing difference.
You can reduce your Payments on Account online via your GOV.UK Personal Tax Account or by completing Form SA303, stating why you expect your lower net profits for the tax year.
No. Student loan repayments collected via Self Assessment are excluded from Payments on Account calculations. Payments on Account apply strictly to Income Tax and Class 4 National Insurance.
If your actual profits drop and your advance Payments on Account exceed your actual tax liability, HMRC will automatically refund the excess credit directly to your bank account upon receiving your tax return.