Payments on account explained: why January's bill is so big
Payments on account are advance payments towards next year's tax bill. Each is usually half of last year's bill, paid on 31 January and 31 July. They're why many first-year sole traders find January's bill is 50% bigger than they expected.
On this page
Checked against GOV.UK on 23 October 2026. General information for sole traders in England, Wales and Northern Ireland, not tax advice. Scottish Income Tax rates are different.
What payments on account are
GOV.UK says payments on account are payments towards your next tax bill, including Class 4 National Insurance if you're self-employed. Each is half of last year's bill, due by midnight on 31 January and 31 July.
Who doesn't have to make them
- Your last Self Assessment bill was less than £1,000, or
- you've already paid more than 80% of all the tax you owe, for example through your tax code or CIS deductions.
The second rule often applies to CIS subbies: 20% taken from all your labour may already cover more than 80% of the bill.
Worked example for 2025/26
Jo had £30,000 profit in 2025/26 and no CIS. Her bill is £3,486.00 Income Tax plus £1,045.80 Class 4 NI = £4,531.80. It's her first year, so she made no payments on account in 2026.
| Due | What | Amount |
|---|---|---|
| 31 January 2027 | 2025/26 bill in full | £4,531.80 |
| 31 January 2027 | First payment on account for 2026/27 | £2,265.90 |
| 31 January 2027 | Total | £6,797.70 |
| 31 July 2027 | Second payment on account | £2,265.90 |
If her 2026/27 bill is the same, her two payments on account cover it, so the big jump only happens once unless profit rises.
To see your own figures, use the January tax bill calculator for the balancing payment and payments on account, or the self-employed tax calculator for a whole-year estimate.
Reducing payments on account
If this year's profit will be lower, you can ask HMRC to reduce them through your online account. If you reduce them too far, you'll pay interest on the shortfall.
The balancing payment
If your payments on account are less than the real bill, you pay the difference the next 31 January. GOV.UK's example: a £3,000 bill with £1,800 paid on account leaves a £1,200 balancing payment. See also your first Self Assessment tax bill.
This guide is part of our Self Assessment guides for the self-employed.
Free: The UK Contractor's Cheat Sheet 2026/27
CIS rates, overtime maths, tax dates, mileage, VAT and late payment, on 2 pages. Keep it on your phone or print it for the van.
Frequently asked questions
How much is a payment on account?
Usually half of last year's Self Assessment bill, including Class 4 National Insurance.
When are payments on account due?
31 January and 31 July.
Do I have to make payments on account?
Not if last year's bill was under £1,000, or more than 80% of your tax was already paid, for example through CIS or PAYE.
Can I reduce them?
Yes, if you expect lower profits, but you'll pay interest if you reduce them too much.
Sources
- Understand your Self Assessment tax bill: payments on account – GOV.UK
- Pay your Self Assessment tax bill – GOV.UK
- Income Tax rates: previous tax years – GOV.UK
- Self-employed National Insurance rates – GOV.UK
This guide is general information, not legal, tax or financial advice. Rules and rates change, so check the linked GOV.UK pages for the current position.