What “payments on account” means
Employees pay tax every month through PAYE. Self Assessment works differently: you pay after the tax year ends. To bring things closer to “pay as you go”, HMRC asks most people to pay advance payments towards next year’s bill. Each one is half of last year’s Self Assessment bill, due on 31 January and 31 July.
Example: a £3,000 bill in your first year
The calculator is set for someone who started self-employment in 2025/26, with £3,000 of income tax and Class 4 National Insurance for that year, nothing taken at source and no earlier payments on account.
- Balancing payment for 2025/26: the whole £3,000 (you have paid nothing towards it yet).
- First payment on account for 2026/27: half of £3,000 = £1,500.
- Total on 31 January 2027: £4,500.
- 31 July 2027: the second payment on account, another £1,500.
So in the first year you pay 150% of your bill in January. From the second year on, your two advance payments have already covered most of the bill, so January is much calmer.
Other first-year bills
Same situation (no tax at source, nothing paid on account before):
| 2025/26 bill (no earlier payments on account) | Pay by 31 January 2027 | Pay by 31 July 2027 |
|---|---|---|
| £900 | £900 | £0 |
| £1,000 | £1,500 | £500 |
| £2,000 | £3,000 | £1,000 |
| £3,000 | £4,500 | £1,500 |
| £5,000 | £7,500 | £2,500 |
| £10,000 | £15,000 | £5,000 |
Notice the first row: if your Self Assessment bill is under £1,000, you do not make payments on account at all — you just pay the bill by 31 January.
A gentle plan for next time
- Save as you earn. Putting 20–30% of each invoice into a separate account is a simple habit that makes January stress-free.
- File early. You can file from 6 April. Filing early does not mean paying early, but it tells you the number months ahead.
- Income going down? If you expect 2026/27 to be lower, you can ask HMRC to reduce your payments on account — see our guide on reducing them.
- Struggling to pay? HMRC’s Time to Pay service lets many people spread a bill of up to £30,000 over monthly instalments.
How to pay
After you file, your HMRC online account shows the two amounts separately: the balancing payment and the first payment on account. You can pay both together using your payment reference — your 10-digit Unique Taxpayer Reference followed by the letter K. Bank transfer, debit card and Direct Debit all work; leave a few working days for the money to arrive.
Payments on account cover income tax and Class 4 National Insurance only. Capital gains tax and student loan repayments are added to the balancing payment, never to payments on account.
FAQ
Why is my first Self Assessment bill so big?
Because 31 January includes the whole of last year’s tax plus the first advance payment for this year. With a £3,000 bill, that is £3,000 + £1,500 = £4,500.
What do I pay on 31 July 2027 in my first year?
The second payment on account: half of your 2025/26 bill. For a £3,000 bill that is £1,500.
What if my first bill is under £1,000?
Then there are no payments on account. With a £900 bill you pay £900 on 31 January 2027 and nothing in July.
Sources (checked 5 November 2026): GOV.UK “Understand your Self Assessment tax bill: payments on account” (gov.uk/understand-self-assessment-bill/payments-on-account); Taxes Management Act 1970 s59A and the Income Tax (Payments on Account) Regulations 1996 (£1,000 de minimis); GOV.UK “Self Assessment tax returns: deadlines”.