Payments on account: why your first tax bill feels double

Nothing catches first-time filers out quite like this one. You work out you owe, say, £3,000 — then HMRC asks for £4,500. It's not a mistake. It's "payments on account," and here's exactly what's going on.

What payments on account are

Payments on account are advance payments towards next year's tax. HMRC assumes you'll earn roughly the same again, so it asks you to pay some of next year's bill early, in two instalments.

When they apply

You'll be asked for payments on account if:

• your last Self Assessment bill was more than £1,000, and
• less than 80% of your tax was already collected at source (for example through a PAYE tax code).

If either of those isn't true, you won't have to make them.

How they're worked out

Each payment on account is half of your previous year's tax bill. They're due on:

• 31 January — alongside the balancing payment for the year just gone.
• 31 July — the second instalment.

A quick example

Say your first tax bill is £3,000. On 31 January you'd pay that £3,000 plus a first payment on account of £1,500 (half of £3,000) — so £4,500. Then on 31 July you'd pay the second £1,500. The following year, those advance payments are already credited against your bill.

If your income has dropped

Because payments on account assume you'll earn the same again, they can be too high if your income has fallen. You can ask HMRC to reduce them — but be careful, because if you reduce them too far you'll be charged interest on the shortfall. Getting that judgement right is one of the useful things we do for you.

Related guides

• How much tax will I pay? — the bill it's based on
• Self Assessment deadlines — when it's due
• Our Self Assessment service — we tell you the figure in advance

This guide is general information, not personal tax advice. Rules and thresholds can change — always confirm the current position on GOV.UK or ask us to check your situation.