Self Assessment Payment on Account 2026: What It Is, When It's Due, and How to Reduce It
Your second payment on account is due 31 July 2026. What payments on account are, who has to pay them, how the 50% calculation works, and how to legitimately reduce them — with worked examples.
Quick Answer
Your second payment on account for 2025/26 is due by 31 July 2026. It equals 50% of your 2024/25 tax bill. You owe payments on account if your last Self Assessment bill was £1,000 or more and less than 80% of your tax was collected at source. You can reduce them if your income has genuinely fallen — but reduce too far and HMRC charges interest at 7.75%.
What Is a Payment on Account?
A payment on account is an advance payment towards your next Self Assessment tax bill. HMRC asks for it because it does not want to wait a full extra year to collect tax on income that is not taxed at source — self-employment profits, dividends above the allowance, rental income, and so on.
Instead of paying your whole bill in one go after the tax year ends, you pay it in two instalments based on the previous year's liability, with a final adjustment later. For company directors who take most of their income as dividends, this is the mechanism that quietly doubles your January bill the first time it applies — so it is worth understanding before 31 July catches you out.
Who Has to Make Payments on Account?
You owe payments on account if both of these are true:
- Your last Self Assessment tax bill was £1,000 or more, and
- Less than 80% of the tax you owed was already collected at source (for instance via PAYE on a salary).
If either test fails, you do not make payments on account — you simply pay your bill in full by 31 January. Most directors who pay themselves a small salary and top up with dividends will meet both tests and therefore owe payments on account.
The Two Deadlines
Payments on account are split into two equal instalments:
| Payment | Due date | Amount |
|---|---|---|
| First payment on account | 31 January | 50% of last year's tax bill |
| Second payment on account | 31 July | 50% of last year's tax bill |
| Balancing payment | Following 31 January | The difference between your actual bill and what you have already paid |
So the 31 July 2026 payment is the second payment on account for the 2025/26 tax year, and it is calculated as 50% of your 2024/25 tax bill — the return you filed by 31 January 2026.
Worked Example
Say your 2024/25 Self Assessment bill came to £3,000, none of it collected at source. Here is how it plays out:
- 31 January 2026: balancing payment for 2024/25, plus your first payment on account for 2025/26 of £1,500 (50% of £3,000).
- 31 July 2026: your second payment on account for 2025/26 of £1,500.
- 31 January 2027: you file your 2025/26 return. If your actual 2025/26 bill was £3,400, you have already paid £3,000 in payments on account, so you owe a balancing payment of £400 — plus your first payment on account for 2026/27 of £1,700.
This is why the first year you fall into Self Assessment feels brutal: that January you can pay up to 150% of your tax bill (the full balancing amount plus a 50% payment on account on top).
How to Reduce Your Payments on Account
Payments on account are based on last year's income, so if you expect to earn less this year — fewer dividends, a quieter trading year, a property sold — you may be paying too much up front. You can apply to reduce them:
- Through your HMRC online account (Self Assessment → "Reduce payments on account"), or
- By submitting form SA303.
The catch: if you reduce your payments below what you actually end up owing, HMRC charges late-payment interest at 7.75% (the rate from 9 January 2026) on the difference, backdated to the original due dates. Reduce based on a realistic estimate, not wishful thinking. If in doubt, pay the full amount — any overpayment is refunded with interest after you file.
What Payments on Account Do Not Cover
Two things are never included in payments on account and are always settled in the 31 January balancing payment:
- Capital Gains Tax — for example from selling a property or shares.
- Student loan repayments collected through Self Assessment.
So even if your payments on account are fully up to date, you can still owe a balancing payment in January if you had a capital gain during the year.
Late or Missed Payments
Payments on account do not attract the fixed late-filing penalties that a missed tax return does, but interest still accrues at 7.75% from the day after the deadline until you pay. If cash flow is tight, paying part of it on time and the rest as soon as possible limits the interest — partial payment is better than nothing. HMRC's Time to Pay arrangement can spread the cost if you genuinely cannot pay.
How to Pay
You can pay by bank transfer (Faster Payments usually clear same or next day), debit card, or Direct Debit through your HMRC online account. Allow several working days if paying by post or at your bank. Use your 11-character Self Assessment payment reference (your UTR followed by the letter K) so HMRC allocates it correctly.
The Bottom Line
If you filed a 2024/25 Self Assessment return with a bill of £1,000 or more, expect a payment on account equal to half of it due on 31 July 2026. Check the figure in your HMRC account now rather than at the end of the month, decide whether your income has dropped enough to justify reducing it, and set the cash aside. Planning your salary and dividend mix for the year ahead is the cleanest way to stop payments on account surprising you — our salary and dividend calculator shows the tax due so you can budget for both instalments.
Related Guides
- Self Assessment Deadline 2026: Key Dates for Directors
- How to Do a Self Assessment Tax Return (UK)
- Self Assessment for Company Directors
- Dividend Tax Rising in April 2026: What It Means
This guide is general information, not personal tax advice. Figures are for the 2024/25 and 2025/26 UK tax years. Check your own position in your HMRC online account or with a qualified adviser.
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