What are income tax payments on account?

Well done on getting your self-assessment tax return completed ahead of the deadline. Your tax return will include a tax calculation and how much tax you must pay will determine if you need to make income tax payments on account (POAs).

POAs are where you must pay some of your future income tax liability in advance. You may have to make POAs when: 

• your income tax liability is greater than £1,000, and 
• less than 80% of your tax liability is collected by Pay As You Earn (PAYE). 

Instead of just paying your income tax liability by 31st January, you will have to make two tax payments each year, known as 'payments on account'. 

For example, Sasha submits her tax return for 2024/25 and this results in a tax bill of £5,000 which is due by 31st January 2026. Sasha is a landlord and most of her income is from her property rentals.  She meets both criteria for making POAs, so she also needs to make payments in advance for her 2025/26 tax return. The payments Sasha must make in advance of her 2025/26 tax liability are based on her 2024/25 tax liability (excluding capital gains). Half of this should be paid by 31st January and the second half by 31st July. 

Following the submission of Sasha's 2024/25 tax return she will need to make the following payments:

Payment date	Amount
31st January 2026 - 2024/25 tax due (whole bill)	£5,000
31st January 2026 - half of estimated 2025/26 tax	£2,500
31st July 2026 - second half of estimated 2025/26 tax	£2,500

Once Sasha's 2025/26 tax return is prepared (with a deadline of January 2027) she will need to pay any balance of tax above the £5,000 she has paid via POAs, or she will be refunded if she has overpaid. Sasha will receive repayment interest from HMRC along with any refund. Sasha can opt for her refund to be set against her POA for 2026/27 if she is still required to make POAs.

What if you are not expecting your tax bill to be as much?

It is possible to ask HMRC to reduce the amounts payable, if you have a valid reason. For example, you may be aware that your income is going to reduce significantly due to a change in your circumstances. HMRC Form SA303 can be completed, or you or your accountant can apply to reduce your payments on account online. 

If you do reduce your POAs, and your tax liability ends up being higher than this reduced amount, HMRC will charge interest on the underpayment. If you are expecting an increase in your tax liability compared to the previous year, there is no need to increase your POAs.

What are the benefits of filing your tax return early?

A benefit of filing your tax return early is that if your tax return has been completed by 31st July you will be aware of your actual tax liability. You can therefore pay the correct amount at this date, rather than an estimate. This is a great incentive to get your tax return prepared and submitted earlier! 

What if I am new to self-assessment?

If you are new to self-employment, you will not have paid any tax on your self-employment income until you file your first tax return. If you are expecting a tax liability, working with an accountant may be beneficial so you can plan for your tax effectively and are prepared for the payments. It can be a shock if you have not made POAs before to then have to pay additional tax in advance for the next tax year, before you have even earned the income. 

Last updated 9 Jul 2025 | First published 8 Nov 2023

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This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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