Yes — Payments on Account are advance payments of Income Tax and Class 4 National Insurance that HMRC requires most higher-earning Self Assessment taxpayers to make twice a year. They help spread your tax bill and reduce the risk of a large lump-sum payment on 31 January.

Updated March 2026: With frozen tax thresholds and higher interest rates still in effect, more self-employed individuals, landlords, and company directors are now falling into the Payments on Account system. The rules remain the same as previous years, but the amounts are often higher due to increased profits and unchanged tax bands. HMRC calculates these payments automatically based on your previous year’s tax liability.

At Filing Accounts, we help thousands of Self Assessment clients understand, calculate, and pay their Payments on Account on time — avoiding late-payment interest and stress. Contact us today for expert help with your Self Assessment and Payments on Account.

What Exactly Are Payments on Account?

Payments on Account (often called POAs) are two equal advance payments towards your total Income Tax and Class 4 National Insurance bill for the current tax year.

• They are not an extra tax — they are simply early payments of tax you will eventually owe.
• You make them on 31 January (first POA) and 31 July (second POA) each year.
• The final balancing payment (or refund) is settled on the following 31 January when you file your Self Assessment tax return.

Simple example: If your total tax bill for 2025/26 is £8,000, you will usually pay £4,000 on 31 January 2026 and £4,000 on 31 July 2026. Any over or under payment is adjusted on 31 January 2027.

Official GOV.UK guidance: Payments on account for Self Assessment

Who Has to Make Payments on Account?

You must pay Payments on Account if both of the following apply:

• Your previous year’s Self Assessment tax bill (Income Tax + Class 4 NI) was £1,000 or more, and
• You paid less than 80% of your tax bill through PAYE or other deductions.

Common groups who pay POAs:

• Self-employed sole traders with profits over roughly £30,000–£40,000
• Landlords with significant rental income
• Company directors taking dividends
• Anyone with untaxed income (investments, freelance work, etc.)

Important 2026 note: Even if your income has dropped this year, you may still have to pay the same POA amount as last year — you can claim it back when you file your return.

How Are Payments on Account Calculated?

HMRC automatically calculates your POAs based on your previous tax year’s liability.

• Each POA = 50% of the previous year’s Income Tax + Class 4 National Insurance.
• HMRC sends you a statement (SA370 or SA372) showing the exact amount.

Example for 2025/26 tax year:

• 2024/25 tax bill = £12,000
• First POA due 31 Jan 2026 = £6,000
• Second POA due 31 July 2026 = £6,000

You can ask HMRC to reduce your POAs if you expect your income to fall significantly this year.

Deadlines for Payments on Account 2026/27

Missing these deadlines triggers late-payment interest (currently 7.75%) from the due date.

How to Pay Your Payments on Account

You have several easy options:

1. Online via HMRC Personal Tax Account (recommended) Log in → Self Assessment → Payments → Pay now. Instant confirmation.
2. Bank transfer / Faster Payments Use your 11-character reference (your UTR + letter K).
3. Debit or credit card (via GOV.UK pay page).
4. Direct Debit (set up once for automatic payments).

Official payment page: Pay your Self Assessment tax bill

What Happens If You Overpay or Underpay?

• Overpaid → You will receive a refund or it will reduce your next year’s POAs.
• Underpaid → You pay the difference (plus any interest) on 31 January the following year.

You can ask HMRC to reduce your POAs at any time if your circumstances have changed.

Step-by-Step Checklist: Managing Payments on Account in 2026

1. Check your HMRC online account for the exact POA amounts.
2. Set calendar reminders for 31 January and 31 July.
3. Budget the payments into your cash flow.
4. Review your expected income mid-year — request a reduction if needed.
5. Keep records of all payments for your tax return.
6. File your Self Assessment on time (by 31 January) to finalise the balance.

Common Mistakes to Avoid

• Ignoring the POA because “I’ll sort it when I file my return”
• Using the wrong payment reference
• Forgetting that POAs are based on last year’s (higher) income
• Not claiming a reduction when income drops

What Our Clients Say on Trustpilot

• “Filing Accounts explained my Payments on Account clearly and helped me pay on time. No surprise bills!” – Anonymous, March 2026 (5 stars)
• “Excellent guidance on Self Assessment POAs. They even set up reminders for me.” – Mark T., February 2026 (5 stars)
• “Saved me from late-payment interest. Professional and very helpful.” – Sarah L., January 2026 (5 stars)

With our consistent 4.2/5 Trustpilot rating, clients rely on us for clear, practical Self Assessment support.

Frequently Asked Questions

What is the minimum tax bill that triggers Payments on Account? £1,000 or more for the previous tax year.

Can I reduce my Payments on Account? Yes — contact HMRC online or by post if you expect lower tax this year.

Do I still pay POAs if I have no tax to pay this year? You may still receive demands, but you can claim a reduction or get a full refund after filing.

Does Filing Accounts help with Payments on Account? Absolutely — we review your position, calculate correct amounts, and handle payments if required.

Official GOV.UK resources:

• Payments on account
• Pay Self Assessment tax bill
• Self Assessment tax returns

Need Help with Your Self Assessment Payments on Account?

Payments on Account can feel confusing, especially when cash flow is tight. Filing Accounts provides clear explanations, accurate calculations, and full support so you never miss a deadline or overpay.

Contact us today or book a free consultation — we’ll take care of your Payments on Account and entire Self Assessment for 2026.