When are the statutory deadlines for payments on account?

Payments on account are due in two equal 50% instalments: 1) The first payment on account is due on 31 January (during the relevant tax year). 2) The second payment on account is due on 31 July (following the end of that tax year on 5 April). Any remaining tax liability (the balancing payment) is due on the following 31 January when you file your final SA100 Self-Assessment tax return.

What is the 'first-year tax shock' for new sole traders?

In your first full year of self-employment, you do not make payments on account because you had no prior tax bill. However, on 31 January following your first year, you must pay: 1) 100% of your first year's tax liability, PLUS 2) 50% of that same amount as your first payment on account for year two. This means your total tax payment on 31 January is 150% of your annual tax bill, catching many unprepared freelancers out. Planning ahead and setting aside 25% to 30% of gross revenue is crucial.

How can I reduce my payments on account using Form SA303?

Under Section 59A(3) TMA 1970, if you expect your net taxable profits or untaxed income to fall in the current year (due to lost clients, maternity leave, reduced trading, or increased pension contributions), you can ask HMRC to reduce your payments on account. You can submit this request online via your HMRC Government Gateway account or by filing paper Form SA303.

What happens if I reduce my payments on account by too much?

If you claim a reduction under Form SA303 and your actual year-end tax liability turns out to be higher than your reduced estimate, HMRC charges statutory late payment interest under Section 86 TMA 1970 on the shortfall (currently set at the Bank of England base rate + 2.5%, typically 7.5%+). If HMRC determines you deliberately underpaid to avoid cash outflow, they may also issue penalties for negligent or deliberate inaccuracy.

Are student loan repayments included in payments on account?

No. Under the Education (Student Loans) (Repayment) Regulations 2009, student loan repayments (Plan 1, Plan 2, Plan 4, Plan 5, and Postgraduate loans) and Capital Gains Tax (CGT) are excluded from the calculation of payments on account. You pay student loans and CGT as part of your final balancing payment on 31 January.

Section 59A TMA 1970 Advance Tax Engine

Payment on Account Calculator UK 2026/27: Self-Assess

Calculate statutory HMRC payments on account for sole traders and partners. Model 31 January and 31 July 50% instalments, the £1,000 and 80% exemption thresholds, and Form SA303 reduction claims.

By AfterTaxUK Editorial Team••Updated 26 October 2026•Statutory 2026/27 Engine

Quick Tax Scenarios (Click to Load)

Previous Tax Year Liabilities

From your official HMRC SA302 calculation or Self-Assessment tax return.

SA Income Tax & Class 4 NI (£)£6,000

Total Income Tax and Class 4 National Insurance from your latest return.

Tax Deducted at Source / PAYE (£)£0

PAYE share of total tax:0.0%

Current Tax Year (2026/27) Profit Trend

Apply to Reduce Payments on Account (Form SA303)Statutory application under TMA 1970 s.59A(3) when your upcoming taxable profit is projected to decline.

Mandatory Payments on Account Apply

Two 50% Advance Payments Required for 2026/27

Under Section 59A Taxes Management Act 1970, your previous SA bill exceeds £1,000 and less than 80% was deducted at source. HMRC requires two payments of 50%each towards next year's bill.

Deadline 131 January 2027

Total Cash Required

£9,000

150% of your annual SA tax liability!

Balancing Bill (2025/26):£6,000

1st Advance POA (2026/27):+£3,000

Deadline 231 July 2027

Total Cash Required

£3,000

Second advance payment on account

2nd Advance POA (2026/27):£3,000

Balancing Payment:£0 (Due Jan)

Cash-Flow Buffer Target

10-Month Runway

£900 / month

Transfer this amount monthly into a dedicated business savings account to pay 31 January without taking debt or overdrafts.

Total Jan Outflow:£9,000

Full Year Outflow:£12,000

Visual Timeline: The First-Year Self-Employed Tax Shock

How payments on account transition from honeymoon to rolling advance payments.

Year 1 Trading (06 April – 05 April)

You invoice clients and earn profits. No tax is deducted at source. Freelancers often falsely assume all banked money is spendable profit.

31 January (The 150% Cash Shock)Danger Zone

You must pay 100% of Year 1 tax (£6,000) PLUS 50% as the first advance payment for Year 2 (£3,000). Total cash out the door: 150% in a single day!

31 July (The Mid-Year Advance)

You pay the second 50% payment on account (£3,000). By 31 July, Year 2 tax is 100% pre-funded before you have even filed the Year 2 tax return.

Subsequent 31 January (The Rolling Steady State)

You file Year 2's return. You only pay any remaining balancing shortfall (if profit grew) or receive a refund, plus 50% for Year 3. The 150% shock never repeats unless your profits double!

Statutory Authority

1. How Payments on Account Operate Under TMA 1970

Under Section 59A of the Taxes Management Act 1970, payments on account are statutory advance tax payments designed to collect Income Tax and Class 4 National Insurance in real time as income is earned.

The £1,000 De Minimis Rule

If your total Self-Assessment bill (Income Tax + Class 4 NI) is under £1,000, you are exempt from payments on account. You pay the balance in a single payment on 31 January.

The 80% Deducted-at-Source Test

If 80% or more of your total tax liability was deducted at source (through PAYE or CIS construction withholding), you are exempt from making payments on account, regardless of the bill size.

Payment Calendar

2. The Statutory Payment Calendar

Payments on account split your projected tax liability into two equal halves based on the previous year:

31 January: 1st Payment on Account

50% of the previous year relevant tax bill, paid simultaneously alongside any balancing payment for the prior year.

31 July: 2nd Payment on Account

The remaining 50% instalment. Falling after the 5 April tax year-end, this clears the estimated advance liability.

Following 31 January: The Balancing Reconciliation

Once your actual SA100 return is submitted, HMRC credits your two payments on account. Any shortfall is paid as a balancing payment; any surplus is refunded with interest.

Form SA303 & Penalties

3. Claiming Reductions via Form SA303 Safely

Under Section 59A(3) TMA 1970, taxpayers whose income has dropped can reduce their payments on account online or via Form SA303. However, exercise caution:

Section 86 TMA 1970 Interest Trap: If you reduce your payments on account and your actual tax bill turns out higher than anticipated, HMRC will charge statutory interest (currently 7.5%+) backdated to 31 January and 31 July on the difference. Ensure you base any reduction claim on documented management accounts or invoices.

Frequently Asked Questions

Clear answers based on official HMRC rules and statutory guidance.

Under Section 59A of the Taxes Management Act 1970 (TMA 1970), payments on account are advance tax payments towards your next tax year's Income Tax and Class 4 National Insurance liabilities. You are legally required to make payments on account if your annual Self-Assessment tax bill exceeds £1,000, UNLESS more than 80% of your total tax liability was deducted at source (for instance, via PAYE employment or CIS deductions).

Recommended Resources

Related Calculators, Salaries & Guides

Explore connected UK tax tools, popular salary benchmarks, and statutory HMRC guidance.

Related Calculators

All Calculators

Self-Employed Tax Calculator

Calculate sole trader Income Tax, Class 4 NI, and total SA100 bills.

Open Tool

CIS Tax Calculator

Model subcontractor CIS deductions and HMRC tax refund reconciliations.

Open Tool

Dual Income Tax Calculator

Combine PAYE employment with sole trader income under the 80% rule.

Open Tool

HMRC Tax Refund Calculator

Reconcile overpaid payments on account and claim fast HMRC repayments.

Open Tool

Compare Common UK Salaries

All Salary Brackets

£30,000 / yr£2,093 / mo

£45,000 / yr£2,993 / mo

£60,000 / yr£3,793 / mo

£85,000 / yr£5,006 / mo

Statutory Tax Guides & Blog

Visit Blog Hub

Second Job & Side Hustle Tax Guide

£1,000 trading allowance, sole trader tax reporting, and NI contribution rules.

Read Guide

How UK Income Tax Works

Personal allowances, statutory tax bands, and HMRC PAYE deduction rules.

Read Guide

What Is PAYE on a UK Payslip?

How PAYE tax withholding interacts with the 80% exemption threshold.

Read Guide

Use the correct tax year and filing route

Distinguish registration, paper return, online return, balancing-payment and payment-on-account dates. A deadline list does not file a return or calculate every penalty.

Payments on account depend on the previous liability and tax already collected. Reducing them below the eventual liability can cause interest. Verify any HMRC notice and its appeal deadline.

Check the rules for your circumstances

Official guidance supports the rules described here; it does not approve or certify this calculator. Confirm dates, eligibility and unsupported cases before making a financial decision.