Payments on account explainer
A first Self Assessment demand can look like about 150% of the tax due for the year, because it bundles the balancing payment with a first payment on account, an advance instalment towards 2026/27, under gov.uk's guidance on payments on account. Payments on account apply once the bill passes £1,000. This calculator estimates what falls due in January and July.
Why is the first bill bigger?
The demand appears too high because it covers two liabilities at once. First it settles the tax for the year that has just ended, called the balancing payment. Then, on the same date, HMRC asks for a first payment on account: an advance instalment worth half of that bill, put towards the year currently under way. Adding the full bill and the half gives roughly 150% of one year's tax in a single January, under gov.uk's guidance on payments on account.
The other half follows on 31 July as a second payment on account. Both instalments are credited against next year's real bill, so nothing is paid twice, only ahead. The system only starts once the bill passes £1,000, and once it is running the January figure settles down because instalments towards the year have already been paid.
What would I pay on a worked example?
Suppose the Self Assessment bill for the year is £7,132. On 31 January 2028 the estimated payment is that £7,132 balancing amount plus a £3,566 first payment on account, so £10,698 in total. On 31 July 2028 the second £3,566 instalment falls due. Across the two dates the estimated total is £14,264, the bill plus a full year paid in advance.
Common questions
Why is my tax bill 150% of what I expected?
Because the first bill bundles two things. You pay the full tax for the year just gone, then HMRC adds a first payment on account worth 50% of that towards next year. That is why the January demand is about 150% of one year's tax. A second 50% follows on 31 July.
What is a payment on account?
It is an advance instalment towards next year's tax, based on the assumption that you will earn something similar again. There are two, each 50% of your last bill, due 31 January and 31 July. They are credited against next year's actual bill.
When do payments on account apply?
When your Self Assessment bill is more than £1,000, unless more than 80% of your tax is already collected at source (for example through PAYE). Below £1,000 you pay only the balancing amount with no advance instalments.
Can I reduce my payments on account?
Yes, if you know your profit will be lower next year you can ask HMRC to reduce them. Be careful: if you reduce them too far and end up owing more, HMRC charges interest on the shortfall.
Does the second year settle down?
Yes. Once the system is running you have already paid two instalments towards the year, so the following January you only pay the balancing difference plus the next first instalment. The 150% shock is mainly a first-year problem.
Why is the first bill bigger?
The demand looks high because it covers two liabilities at once. First it settles the tax for the year that has just ended, the balancing payment. Then, on the same date, HMRC asks for a first payment on account, an advance instalment worth 50% of that bill towards the next year. Adding the full bill and the half gives roughly 150% of one year's tax in a single January, under gov.uk's guidance on payments on account.
What would I pay on a worked example?
Suppose the Self Assessment bill for the year is £7,132. On 31 January 2028 the estimated payment is that £7,132 balancing amount plus a £3,566 first payment on account, so £10,698 in total. On 31 July 2028 the second £3,566 instalment falls due. Across the two dates the estimated total is £14,264, the bill plus a full year paid in advance.
Sources & Rate Verification
Rates verified against official statutory guidance on 6 September 2026.