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Understand Your Self Assessment Tax Bill

Tax

Understand Your Self Assessment Tax Bill (1)

Payments on Account

What are Payments on Account?

Payments on account are advance payments towards your tax bill, including Class 4 National Insurance if you’re self-employed.

Do I Need to Make These Payments?

You have to make 2 payments on account every year unless:

  • Your last Self Assessment tax bill was less than £1,000
  • You paid more than 80% of the previous year’s tax through your tax code or because your bank already deducted interest on your savings

How Much and When?

Each payment is half of your previous year’s tax bill. Payments are due by midnight on 31 January and 31 July.

If you still owe tax after these payments, you’ll need to make a ‘balancing payment’ by midnight on 31 January the following year.

Example Time!

Your tax bill for the 2022-2023 tax year is £3,000. You made two payments of £900 each (£1,800 in total) on account towards this bill in 2023.

The total tax due by midnight on 31 January 2024 is £2,700. This includes:

  • A balancing payment of £1,200 for the 2022-2023 tax year (£3,000 minus £1,800)
  • The first payment on account of £1,500 (half your 2022-2023 tax bill) towards your 2023-2024 tax bill

You then make a second payment on account of £1,500 on 31 July 2024.

If your tax bill for 2023-2024 exceeds £3,000 (the total of your two payments on account), you’ll need to make another balancing payment by 31 January 2025.

What’s Not Included?

Payments on account don’t cover capital gains or student loans (if you’re self-employed) - you’ll pay those in your balancing payment.

Check Your Payments on Account

  1. Sign in to your online account.
  2. Select the option to view your latest Self Assessment return.
  3. Select ‘View statements’.

You’ll then see:

  • Payments on account you’ve already made
  • Payments you need to make towards your next tax bill

Reduce Your Payments on Account

If you know your tax bill will be lower than last year, you can ask HM Revenue and Customs (HMRC) to reduce your payments on account. You can do this online or by post.

To Reduce Online

  1. Sign in to your online account.
  2. Select the option to view your latest Self Assessment return.
  3. Select ‘Reduce payments on account’.

To Reduce by Post

Send form SA303 to your tax office.

Overpayments or Underpayments

  • If you overpay, HMRC will send you a refund.
  • If you underpay, you’ll be charged interest.