Payments on Account 2027: Deadlines, Amounts and How to Reduce Them
Payments on account 2027 at a glance
You make payments on account if your last Self Assessment bill was over £1,000 and less than 80% of your tax was collected at source.
Each payment is 50% of last year’s Income Tax and Class 4 National Insurance.
31 January 2027: balancing payment for 2025/26 plus the first payment on account for 2026/27. 31 July 2027: second payment on account for 2026/27.
Late payment interest is 7.75% a year at the time of writing. You can apply to reduce payments on account if your income has fallen.
From April 2029 the system changes to smaller, more regular payments.
Who has to make payments on account
HMRC asks for payments on account when two conditions are met: your previous Self Assessment bill was more than £1,000, and less than 80% of the tax you owed was collected at source, for example through PAYE on a salary.
The bill counted for this test is your Income Tax plus Class 4 National Insurance. Capital Gains Tax, student loan repayments and Class 2 National Insurance are left out. You pay those in the balancing payment, never in advance.
Most people who need to pay are sole traders, partners in a partnership and landlords with no employment income to carry the tax.
Dates and amounts in 2027
Payments on account always look one year ahead. In 2027 you are paying towards the 2026/27 tax year, using your 2025/26 bill as the yardstick.
31 January 2027: the balancing payment for 2025/26 (whatever is left after the two payments on account you made during 2026) plus the first payment on account for 2026/27.
31 July 2027: the second payment on account for 2026/27.
31 January 2028: the balancing payment for 2026/27 plus the first payment on account for 2027/28.
Each payment on account is half of the Income Tax and Class 4 National Insurance you owed for 2025/26. If your 2026/27 bill turns out higher, you settle the difference in January 2028. If it is lower, HMRC refunds the overpayment or sets it against the next payment.
If 2025/26 was your first year in Self Assessment, January 2027 is the expensive one: you pay the whole 2025/26 bill and half of it again as the first payment on account. In effect, 150% of one year’s tax in a single month.
How to reduce payments on account
If you expect your 2026/27 income to be lower than in 2025/26, you do not have to wait for a refund. You can ask HMRC to reduce both payments on account, either online through your Self Assessment account or by posting form SA303. You can do this before or after the first payment, and you can set the amount to zero if you expect no tax to be due.
Reduce them to the right level, not the lowest level. If your actual 2026/27 bill is higher than the reduced payments, HMRC charges interest on the shortfall from the original due dates. Estimate honestly and keep a note of how you worked it out.
What happens if you pay late
HMRC charges late payment interest daily from the day after the deadline. The rate is the Bank of England base rate plus 4%, which is 7.75% a year at the time of writing. It moves whenever the base rate changes.
The 5% late payment penalties (at 30 days, 6 months and 12 months) apply to the balancing payment due on 31 January. A late payment on account itself attracts interest only. If you cannot pay, contact HMRC before the deadline about a Time to Pay arrangement, which spreads the bill over monthly instalments.
Treat your tax as a monthly cost. Put aside a fixed share of each invoice (roughly 25 to 30% for a basic-rate sole trader once Class 4 National Insurance is included) in a separate account, so the January and July payments come out of money you never counted as income.
Making Tax Digital from April 2027 does not change the dates
From 6 April 2027, sole traders and landlords whose combined turnover from self-employment and property was over £30,000 in 2025/26 must keep digital records and send quarterly updates to HMRC under Making Tax Digital for Income Tax. The quarterly updates are reports, not payments. Your payments on account and balancing payment still fall on 31 January and 31 July.
What changes from 2029
In the Autumn Budget on 28 October 2026 the government announced that from April 2029 taxpayers who make payments on account will pay smaller, more regular amounts through the year instead of two lump sums. The details will be consulted on. Until then, the January and July system described above stays in place.
FAQ:
1. What are payments on account?
Advance payments towards your next Self Assessment bill. HMRC asks for two a year, each 50% of your previous year’s Income Tax and Class 4 National Insurance, due on 31 January and 31 July.
2. Who does not have to make payments on account?
Anyone whose last Self Assessment bill was under £1,000, or who had more than 80% of their tax collected at source, for example through PAYE.
3. What do I pay on 31 January 2027?
The balancing payment for the 2025/26 tax year plus the first payment on account for 2026/27. The second payment on account is due on 31 July 2027.
4. Can I reduce my payments on account?
Yes. If you expect a lower tax bill, apply online through your Self Assessment account or on form SA303. If you reduce them too far, HMRC charges interest on the shortfall.
5. Do payments on account include Capital Gains Tax?
No. Capital Gains Tax, student loan repayments and Class 2 National Insurance are paid in the balancing payment on 31 January.
Conclusion:
Payments on account in 2027 follow the same rule they always have: half of last year’s Income Tax and Class 4 National Insurance on 31 January, the other half on 31 July. The two things worth acting on are the reduction request if your income has dropped, and a realistic monthly savings habit so the January 2027 bill, which includes both the 2025/26 balance and the first 2026/27 instalment, does not come as a shock. Making Tax Digital adds reporting from April 2027 but leaves the payment dates alone, and the move to more regular payments is still two years away.
