UK Payment on Account Calculator

Each payment on account is 50% of your previous tax year's Income Tax plus Class 4 National Insurance, after deducting any tax already collected at source. If your 2024/25 liability was £26,489 with nothing deducted at source, each instalment is £13,244.50 — one due 31 January 2026 and one due 31 July 2026. HMRC calculates this automatically from your last filed return, so the figure in your online account is the one that counts.

31 January and 31 July each year. The instalment falling due on 31 July 2026 is the second payment towards your 2025/26 liability. Payment must reach HMRC by midnight on the deadline, so initiate a bank transfer at least two working days beforehand — Faster Payments usually arrive same-day, but cheques and some international transfers do not.

Not if either exemption applies. You are outside the regime if last year's Self Assessment bill was less than £1,000, or if more than 80% of the tax you owed was already collected at source — typically through PAYE. If neither applies, both instalments are mandatory. The 80% test is the one that catches people out, because a single year with a large gross payment or an under-withheld bonus can push you below the threshold without warning.

No. Capital Gains Tax is excluded entirely, as are Class 2 National Insurance and student loan repayments. Payments on account are built only from Income Tax and Class 4 National Insurance. This means a year in which a large capital gain dominated your bill produces a much smaller payment-on-account figure than the headline number suggests — a relief in January, and a trap the following year if you assume the gain will repeat.

Log into your HMRC online account and select 'Reduce payments on account', or post form SA303. The online route is effectively immediate; the postal route takes two to four weeks, so allow time. You can apply right up to the deadline. You must give HMRC your expected income for the year, and the reduction applies to both instalments, not just the one coming up.

HMRC charges interest on the shortfall from the original due dates — 31 January and 31 July — not from the date you eventually pay. At the current rate of 7.75%, reducing each instalment by £5,000 on a year that turns out no better than the last costs roughly £583 in interest by the following January. Interest is not a penalty, so there is no reasonable-excuse defence. Only reduce to a figure you can defend by reference to a concrete change in circumstances.

7.75%, effective from 9 January 2026. HMRC's late payment interest is fixed in legislation at the Bank of England base rate plus four percentage points, and with the base rate at 3.75% that gives 7.75%. Repayment interest — what HMRC pays you on overpayments — is base rate minus one, currently 2.75%. That asymmetry is why deliberately overpaying to be safe is a poor trade.

Yes, through a Time to Pay arrangement, which you can usually set up online without speaking to anyone. Interest still runs at 7.75% on the outstanding balance for as long as it is outstanding, so Time to Pay is not an interest holiday. What it does prevent is escalation into formal recovery action. Crucially, set it up before the deadline rather than after — an arrangement made on 30 July is routine, the same conversation in September is not.

Because your first big January combines a full balancing payment for the year just filed with the first payment on account for the current year — 150% of a normal year's tax in one day. On a £26,489 liability that is £39,733.50 leaving your account at once, followed by £13,244.50 the following July. Nothing has gone wrong; you are catching up to a system that collects in advance. If you are approaching your first substantial Self Assessment year, budget for one and a half years of tax.

Yes, but which US tax year gets the credit depends on your election. On the paid basis, a payment made on 31 July 2026 is creditable on your 2026 Form 1040 even though it relates to the UK tax year ended 5 April 2026 — so instalments for one UK year can straddle two US years. On the accrual basis the credit belongs to the year the UK liability accrued, giving a cleaner match. The accrual election is effectively irrevocable, so Americans in the UK should decide deliberately rather than by default.

SA303 is the HMRC form used to claim a reduction in your payments on account. Most people now make the claim through their HMRC online account instead, which processes instantly, but the paper form remains available and is still used where an agent files on your behalf or where online access is not available. Either route requires you to state your expected income for the year, and the same interest risk applies if the estimate proves too low.

You do nothing. Payments on account remain fixed at 50% of last year's liability regardless of how much your income grows, and there is no obligation to increase them voluntarily. The extra tax is collected as a balancing payment on the following 31 January. You can make a voluntary additional payment if you prefer to spread the cost, but there is no interest advantage in doing so — HMRC only pays repayment interest at 2.75%.

Not yet. Making Tax Digital for Income Tax began applying from April 2026 to sole traders and landlords with qualifying income above £50,000, stepping down to £30,000 in April 2027 and £20,000 in April 2028. It introduces quarterly digital updates, but quarterly reporting is not quarterly payment — the 31 January and 31 July dates are unchanged. The practical effect is that HMRC will hold much more current data, making an unsupported reduction claim harder to justify.

Interest starts accruing at 7.75% from 1 August, but there is no automatic late payment penalty on payments on account themselves — the 5% late payment penalties apply to the balancing payment, at 30 days, 6 months and 12 months after the 31 January deadline. That makes a missed July instalment less damaging than a missed January one, but the interest is real and it compounds into your January bill.

It depends on the 80% test. Run your PAYE deductions as a proportion of your total Income Tax and Class 4 NIC liability. If PAYE covered more than 80%, no payments on account are due no matter how large the remaining bill. If it covered less, both instalments apply to the whole Self Assessment balance. People with a large salary and modest freelance income usually clear 80%; a year with a gross-paid bonus or an under-withheld share award often does not.