Tax Payments On Account - UK Income Tax & NI

Our Self Assessment service is provided to clients in England and Wales.

This webpage is a guide to tax "Payment On Account".

Self Assessment - Payments On Account

Income Tax & National Insurance must be paid in full by 31st January for the previous tax year ended 5th April.

For example: for Tax Year 2023/24 (Income Tax year 6th April 2023 to 5th April 2024), Income Tax & NI are payable in full by 31st January 2025.

So for many people (including small businesses), Tax and NI is not payable until neary 10 months after the tax year has ended, which leaves plenty of time to set the money aside.

But, when the Income Tax & Class 4 National Insurance payable is greater than £1,000, then this triggers HMRC's "Payment On Account" requirement - for the current year - the year that you are in, so the 10 months' delay is lost.

Other people to be 'caught' in this advance tax payment requirement are people receiving substantial dividends from their own company.

Payments On Account are collected in the January of the tax year itself and then the following July (ie. 6 months later).

So, Payments On Account are in the two equal instalments:
• 31st January
• 31st July
• any balance of Tax & NI still owing (after the Self Assessment has been filed) has to be paid by the following 31st January as usual.

For example, the tax Payment on Account dates for the 2024/25 tax year (6th April 2024 to 5th April 2025) are:
• 31st January 2025
• 31st July 2025
• any balance of tax still owing (after the Self Assessment has been filed) has to be paid by 31st January 2026.

How the Payments On Account are calculated

The January and July Payments on Account are 50% each, of the Tax and Class 4 NI due for the previous year.

Example:
For 2023/24, a web designer has Tax and Class 4 National Insurance calculation of £1,500, which is payable by 31/1/2025. And this is the first time that the web designer's Tax and NI has been over £1,000. Now Payments On Account must start.

In addition to the £1,500 for 2023/24 which must be paid by 31/1/2025, the web designer must also pay Payments On Account for 2024/25 as follows:

• 31st January 2025 £750
• 31st July 2025 £750
• any balance of Tax & NI still owing for 2024/25 has to be paid by 31st January 2026.

This may be a surprise for the web designer who was only expecting to pay £1,500 on 31/1/2025, and now finds that a total of £2,250 must be paid on 31/1/2025, and a further £750 on 31/7/2025. So that's double the Tax & NI over a 6 month period.

What happens next year with Payments On Account?

Continuing the web designer example:

If for 2024/25, the Tax and National Insurance is finally calulated as £1,800 based on the profit for that year, this is what happens:

• Total Tax & NI Calculation: £1,800
• Payments On Account paid: £750 31/1/25 and £750 31/7/25 = £1,500 paid on account
• Balance payable 31/1/26: £300


Then HMRC calculates Payments On Account for 2025/26 at 50% of the 2024/25 Tax and NI calculation, so 50% of £1,800:

• 31st January 2026 £900 (plus the 2024/25 balance £300)
• 31st July 2026 £900
• any balance of Tax & NI still owing for 2025/26 has to be paid by 31st January 2027.


HMRC Link:
Payments On Account

How to pay your Self Assessment

This UK.GOV link explains the options for paying Self Assessment:
Pay your Self Assessment tax bill.

What is Self Assessment ?

Self Assessment is the UK Tax Return for individuals. You can do the Self Assessment yourself or ask an accountant or other person to do it for you.

There are more details on our Self Assessment webpage.

Tax Services

Our Services can save you the time and the hassle. We will prepare your Income Tax calculations and Self Assessment and submit them to HMRC.

Our Tax Services also include:
• VAT
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• P11D
• CIS

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