With just over a month remaining until a crucial date in the UK tax calendar, millions of taxpayers are being urged to take immediate action to avoid costly interest charges and potential penalties. The HMRC self assessment payment on account deadline falls on July 31, 2026, affecting self-employed individuals, freelancers, landlords, and business owners.
What is the Payment on Account?
The payment on account is an advance contribution toward a taxpayer's forthcoming tax bill, calculated based on their previous year's tax liability. While many are familiar with the self-assessment filing deadline in January, the July payment often catches people by surprise. Payments on account apply to taxpayers whose self-assessment tax bill exceeds £1,000 and where less than 80% of their tax has been deducted at source.
Those required to make payments on account must submit their second instalment for the 2024/25 tax year by July 31, 2026. Each payment is half of the tax owed the previous year, helping to spread the cost of tax across two instalments.
Penalties for Missing the Deadline
Missing the deadline can trigger a late payment interest charge, currently standing at 7.75% on unpaid tax, accruing daily. This may also attract heightened attention from HMRC, potentially resulting in additional examination of an individual's tax affairs. Seb Maley, CEO of tax insurance firm Qdos, warned: "The January tax return deadline gets all the attention, but July is another big date in the tax calendar that can easily catch people out. For many self-employed workers, it's one that can easily be overlooked and can feel like a nasty surprise landing in the middle of summer."
Maley added: "But the worst thing you can do is bury your head in the sand. With the deadline now just a month away, it's vital to check what you owe and make sure you're prepared. Missing the payment can quickly become costly, with interest charges adding up and HMRC potentially taking a closer look at those who fail to pay on time."
How Payments on Account Work
HMRC explains: "Payments on account are payments towards your next tax bill (including Class 4 National Insurance if you're self-employed). They help spread the cost of your tax by making payments in 2 instalments. Each payment is half of the tax you owed last year." These payments are due by midnight on January 31 and July 31. You must make these two payments unless either the amount of tax you owed last year was less than £1,000 or last year you paid more than 80% of the tax you owed outside of Self Assessment (for example through your tax code or because your bank had already deducted interest on your savings).
Your Self Assessment statement or online account will show you how much they are, if you need to pay them.
Calculation and Adjustments
Payments on account are calculated based on your estimated earnings, usually the amount you earned the previous year. Each payment is typically half of the tax you owed the previous year. If you actually earn more than estimated, you may still have tax to pay on top of your payments on account, known as a 'balancing payment'. If you earn less than estimated, you may be able to claim a tax refund.
Taxpayers are advised to check their HMRC online account or self-assessment statement to confirm the amount due and ensure they are prepared for the July 31 deadline. Ignoring the deadline can lead to escalating costs and increased scrutiny from HMRC.
