With just one month remaining until July 31 2026, HM Revenue and Customs (HMRC) is reminding millions of Self Assessment taxpayers to prepare for the second payment on account for the 2025 to 2026 tax year. Experts are warning that many people, particularly those new to freelancing, are unaware of this deadline and risk incurring penalties.
What Is a Payment on Account?
Payments on account are advance payments towards your Self Assessment tax bill, including Class 4 National Insurance if you're self-employed. They are due twice a year: January 31 and July 31. The July 31 deadline often catches people off guard because it falls months after the January rush, when many self-employed individuals, landlords, and business owners are focused on summer cash flow.
Matthew Knight, chief freelance officer at Freelancing.Support, said: "While everyone knows the January 31 deadline, many who are new to freelancing often get caught out by payment-on-account deadlines, which asks you to pay your taxes ahead of your income. Getting into the habit of doing your accounts monthly or quarterly helps you keep on top of the admin, rather than waiting for HMRC to remind you."
How to Pay and Avoid Penalties
HMRC offers several ways to pay, including through the HMRC app, which has been used by nearly two million Self Assessment taxpayers since its launch in January 2022. The app allows users to pay towards their tax liability, set payment reminders, and monitor payment history. Customers can also set up monthly or weekly payment arrangements, and any payments already made through these schemes will be credited towards the next tax bill.
Myrtle Lloyd, HMRC's Chief Customer Officer, said: "We know managing a Self Assessment tax bill isn't always straightforward and we are here to help. From paying instantly via the HMRC app to spreading the cost through a payment plan, there's support available for every customer. Search 'Pay your Self Assessment tax bill' on GOV.UK to choose the payment option that works for you."
Consequences of Missing the Deadline
Missing the July 31 payment on account can lead to interest charges and penalties. Samuel Mather-Holgate, managing director and IFA at Mather and Murray Financial, warned: "If you miss the July 31 payment on account you can quickly face interest, penalties and nasty cash-flow shocks. But HMRC cannot keep relying on last-minute nudges and an app to fix a system many people find confusing. There should be far clearer prompts, plainer language and earlier warnings, especially for the self-employed and side-hustlers."
He added: "The practical advice is simple – check your online account now, do not assume payments on account are optional, put money aside weekly, and speak to HMRC before the deadline if you cannot pay. Silence is usually the most expensive option."
Expert Tips for Staying on Top of Taxes
Ross Lacey, director and Independent Financial Adviser at Fairview Financial Management, emphasised the importance of keeping books up to date: "It's good practice to get on top of this as early as possible. That way, you can ensure the payments on account remain appropriate for the level of income you've actually earned. It also helps with any changes you may want to make to your business in the current tax year. Far too many people are almost a year behind in knowing how their business is really doing. Keeping the book up to date throughout the year makes this less of a mammoth task."
Nouran Moustafa, practice principal and IFA at Roxton Wealth, added: "Self Assessment needs year-round organisation. The July 31 payment catches people off guard because it lands months after the January rush, just when many self-employed people, landlords and business owners are focused on keeping cash moving through the summer. Being up to date matters because this is not a bill you can wish away. Missing it can mean interest, stress and a much bigger problem by January, when the balancing payment and next payment on account can arrive together."
She advised: "Make tax part of managing money all year round. Put aside a percentage of every payment, check your HMRC account now, and only reduce a payment on account where there is a genuine, evidenced reason your income will be lower. If cash flow is tight, act before the deadline, not after it. A payment plan is a tool, not a failure."
