Why your January tax bill may be bigger: payments on account explained
Published 26 October 2026. A practical guide based on GOV.UK rules checked today, rather than an announcement of a new tax introduced today.
Filing your first Self Assessment return? Budgeting only for last year’s tax may leave a gap. Check whether your statement also includes advance payments called payments on account.
What are payments on account?
Each instalment is normally half the previous year’s relevant liability. They usually do not apply if that liability is below £1,000 or more than 80% of tax was paid outside Self Assessment. Your first January bill can include both the annual tax and a first advance payment. Check your HMRC statement for the actual amount.
Which dates should you plan for?
31 January 2027 normally brings the 2025/26 balancing payment and first 2026/27 payment on account; the second advance is due on 31 July 2027. You can make payments in instalments before the deadline. Allow for the processing time of your chosen payment method.
Can you reduce the advances if income falls?
You can apply online or using form SA303 if you reasonably expect a lower tax bill. Lower profits, increased reliefs or more tax deducted at source may justify a reduction. A smaller bank balance alone does not establish that your tax liability has fallen. Reducing advances too far can lead to interest on the shortfall.
Prepare for a useful consultation
Bring your latest HMRC statement, previous tax return, current income and expense figures, and details of tax already paid. Flag one-off income and expected changes to your business separately. This helps distinguish a real reduction in tax from a temporary cash-flow problem.
Speak to ZipTax about planning your Self Assessment payments and whether a reduction is appropriate for your circumstances. Your individual figures determine the amount payable.
