Payments on Account for 2026

Introduction

Payments on account are advance payments towards income tax made by individuals who file under the Self Assessment system in the UK. These payments help spread the tax burden across two instalments during the year. Payments are based on the previous year’s tax liability and are applicable mainly to the self-employed and those without tax automatically deducted from their income.

How to Reduce Your Payments on Account

If you expect a reduction in income for the upcoming year, you can request a reduction in your payments on account. However, if your estimate turns out to be too low, you will be required to pay interest on the shortfall.

Practical Impacts for the 2025/26 – 2026/27 Tax Year

For individuals submitting their tax returns in 2025 for the 2024/25 tax year:

• The first payment on account will be due by 31 January 2026.

• The second instalment will be due by 31 July 2026.

• If the actual tax liability exceeds the payments on account, a balancing payment will need to be paid by 31 January 2027.

Reducing Your Payments on Account

If you anticipate lower income, consider applying for a reduction in your payments on account to avoid overpaying. However, remember that an inaccurate estimate could result in interest charges for any underpaid amount.

Key Information

Conclusion

Payments on account help spread the tax burden over the year, but they can pose challenges for self-employed individuals or those under Self Assessment. Timely requests for reduction in payments can help with cash flow management, ensuring that you do not face unexpected tax liabilities.