Payments on account are a way for HM Revenue & Customs (HMRC) to collect income tax and National Insurance contributions from self-employed individuals in advance. They help spread the cost of your tax by making payments in 2 instalments. Here's a concise explanation of how payments on account work:
Payments on account:
When does this apply?
- If your previous tax bill was over £1,000.
- You don't have to make payments on account if more than 80% of your tax bill is deducted at source (e.g., through PAYE).
Your Self Assessment statement or online account will show you how much they are, if you need to pay them. If you've overpaid, you get a refund. If you've underpaid, you'll need to settle the remaining amount.
When are payments on account due?
- First payment: 31st January (same day as your Self-Assessment deadline).
- Second payment: 31st July.
Find out more about payments on account, and to make a payment, here.