Payments on account explained
Your first Self Assessment bill can be a nasty surprise: HMRC asks for this year's tax and half of next year's, all on 31 January. Here's how payments on account work, and how to be ready.
The short answer: payments on account are two advance payments towards next year's tax — due 31 January and 31 July, each half of last year's bill. You don't make them if last year's bill was under £1,000, or if more than 80% of your tax was already taken off (for example through PAYE).
What they are
HMRC collects Self Assessment tax partly in advance. Each payment on account is half of the tax you owed last year — including Class 4 National Insurance if you're self-employed. They spread your bill into two instalments instead of one.
Why the first bill is 150%
In your first year there's no advance payment to count against your bill, so on 31 January you pay the whole of last year's tax plus the first payment on account for the current year.
Example: a rider's first tax bill, for 2025–26, is £3,000.
| Due | What for | Amount |
|---|---|---|
| 31 January 2027 | 2025–26 tax (£3,000) + first payment on account for 2026–27 (£1,500) | £4,500 |
| 31 July 2027 | Second payment on account for 2026–27 | £1,500 |
| 31 January 2028 | Balancing payment for 2026–27 (if the bill was over £3,000) + first payment on account for 2027–28 | Depends on 2026–27 |
After the first year it evens out: each January you pay any balance for last year plus half of this year's estimate, and each July the other half.
When you don't have to make them
- Your last Self Assessment bill was less than £1,000, or
- You paid more than 80% of last year's tax outside Self Assessment — for example through PAYE on a job.
The balancing payment
If you earned more than last year, your payments on account won't cover the whole bill. The rest — the balancing payment — is due by 31 January after the tax year ends. If you earned less, you may get money back or owe less.
Reducing them
If you expect to earn less this year — fewer shifts, a new job, time off — you can ask to reduce your payments on account in your HMRC online account ("Reduce payments on account") or on form SA303 by post. Be realistic: if you reduce them and your bill turns out higher, HMRC charges interest on what you underpaid.
Be ready for January
- Put aside a share of each payout from the start — 10–15% suits many riders.
- Watch your profit as you go, so January's figure isn't a surprise.
- Making Tax Digital doesn't change payments on account — the same dates apply. See Making Tax Digital for delivery riders.
See January's bill coming
Fisely works out your tax as you earn, including your payments on account, so there are no surprises.
Create a free accountSources
This guide is general information, not tax advice. Rules can change — check GOV.UK or ask an accountant about your own situation.