If you’re registered for Self Assessment, you may have a tax payment due on 31 July 2026. This is known as your second “payment on account” — and if you’re not prepared for it, it can come as an unwelcome surprise. Here’s everything you need to know.
What Is a Payment on Account?
HMRC uses a system called payments on account to collect Self Assessment tax in advance. Instead of waiting until the following January to collect all your tax at once, HMRC asks you to make two advance payments during the year — one on 31 January and one on 31 July.
Each payment is calculated as 50% of your previous year’s tax bill. The idea is that you spread the cost of your tax liability across the year rather than facing one large bill each January.
Who Has to Make Payments on Account?
You’re required to make payments on account if both of the following apply:
- Your last Self Assessment tax bill was more than £1,000
- Less than 80% of your tax was collected at source (for example, through PAYE)
This typically applies to sole traders, freelancers, landlords, company directors with significant dividend income, and anyone with untaxed income above a certain level. If you’re unsure whether payments on account apply to you, it’s worth speaking to your accountant.
How Much Is the July Payment?
Your second payment on account for the 2025/26 tax year is due on 31 July 2026. It will be 50% of your 2024/25 Self Assessment tax bill (excluding any balancing payment or capital gains tax).
For example, if your 2024/25 tax bill was £6,000, your two payments on account would each be £3,000 — one paid in January 2026 and the second due on 31 July 2026.
| 2024/25 Tax Bill | January 2026 Payment | July 2026 Payment |
|---|---|---|
| £2,000 | £1,000 | £1,000 |
| £4,000 | £2,000 | £2,000 |
| £8,000 | £4,000 | £4,000 |
| £12,000 | £6,000 | £6,000 |
Can You Reduce Your Payment on Account?
Yes — and this is something many taxpayers don’t realise. If you believe your 2025/26 tax liability will be lower than your 2024/25 bill (for example, because your income has fallen, or you’ve incurred greater expenses), you can apply to reduce your payments on account.
This is done by submitting a claim to reduce payments on account through your Self Assessment return or via HMRC’s online services. You’ll need to provide a reasonable estimate of your expected income for the year.
It’s important to be accurate: if you reduce your payments too aggressively and your actual tax liability turns out to be higher, HMRC will charge interest on the underpaid amount. However, if you genuinely expect to earn less this year, claiming a reduction is entirely legitimate — and it can make a real difference to your cashflow.
What If You’re New to Self Assessment?
If you’ve only recently registered for Self Assessment — for example, because you became self-employed or started receiving rental income — you won’t yet have a payment on account history. In your first year, you’ll simply pay the full tax bill when it falls due on 31 January. Payments on account then begin from your second year onward.
What Happens If You Miss the 31 July Deadline?
Missing the deadline will result in interest charges from HMRC. As of the 2025/26 tax year, the late payment interest rate is set at the Bank of England base rate plus 2.5%, which has been running at relatively high levels in recent years. While a late payment won’t attract a fixed penalty in the same way a late return does, the interest adds up quickly — so it’s always better to pay on time or contact HMRC to arrange a Time to Pay agreement if you’re struggling.
How to Pay HMRC
There are several ways to pay your Self Assessment tax bill:
- Online or telephone banking — using HMRC’s sort code and account number (the fastest method)
- Debit card — via your HMRC online account at gov.uk
- CHAPS — for same-day payments
- Cheque — posted to HMRC, though this takes longer and is best avoided close to deadlines
You’ll need your 10-digit Unique Taxpayer Reference (UTR) when making the payment so HMRC can allocate it correctly.
Planning Ahead: What Comes After 31 July?
Once the July payment is made, the next key Self Assessment date is 31 January 2027, when your 2025/26 tax return must be filed online and any balancing payment settled. If your actual 2025/26 liability is higher than the two payments on account you’ve made, you’ll owe a balancing payment at that point. If it’s lower, you’ll receive a refund.
Good record-keeping throughout the year — whether through accounting software like Xero or QuickBooks, or simply a well-organised spreadsheet — means you can estimate your final bill well in advance and avoid any nasty surprises in January.
Need Help With Your Tax Payments?
At Westridge Accountants, we help sole traders, landlords, directors and freelancers across West London manage their Self Assessment obligations from start to finish — including making sure you pay the right amount at the right time. Our Self Assessment service starts from just £100.
Contact us at info@westridgeaccountants.co.uk or visit www.westridgeaccountants.co.uk — available 7 days a week, 8am to 10pm.
This article is for general guidance only and does not constitute personalised tax advice. Tax rules can change and individual circumstances vary. Please contact Westridge Accountants for advice tailored to your specific situation. Westridge Accountants Ltd is regulated by AAT and supervised by AAT for Anti-Money Laundering purposes.
