What is Payment on Account? UK Definition 2026/27
Quick Answer
Advance payments towards your Self Assessment tax bill, due 31 January and 31 July.
Definition of Payment on Account
Payments on account are advance payments towards your tax bill for the current year, based on your previous year's liability. Each payment is half of your previous year's bill, due on 31 January and 31 July.
You must make payments on account if your Self Assessment bill was £1,000 or more, and less than 80% was collected at source (e.g., through PAYE). The system helps spread the tax burden but can create cash flow challenges.
Payment on Account — Key Facts for 2026/27
| First payment | 31 January (during tax year) |
| Second payment | 31 July (after tax year) |
| Each payment | 50% of previous year's bill |
| Threshold | Required if bill was £1,000+ |
How Payment on Account Works — Example
- 12024/25 Self Assessment bill: £6,000
- 231 Jan 2026: Pay £6,000 (2024/25 balancing) + £3,000 (first POA for 2025/26)
- 331 Jul 2026: Pay £3,000 (second POA for 2025/26)
- 431 Jan 2027: Balancing payment for 2025/26 (if bill exceeded £6,000)
- 5Plus first POA for 2026/27
How Payment on Account Affects Your Tax
Payments on account mean paying tax before you know your final bill. If your income drops, you can apply to reduce payments. Keep funds aside to avoid January cash flow pressure.
Official HMRC Guidance on Payment on Account
For official guidance, refer to HMRC's documentation. Tax rules can change, so always verify current rates and thresholds on gov.uk.
HMRC: Payments on accountFrequently Asked Questions about Payment on Account
Related Tax Terms
Self Assessment
The system for reporting income and calculating tax owed to HMRC.
Balancing Payment
The final Self Assessment payment due on 31 January to settle your tax bill after payments on account.
Late Payment Interest
Interest charged by HMRC on overdue tax payments at Bank of England rate plus 2.5%.
Accuracy Note
This information is for guidance only and is based on 2026/27 tax year rates. Tax rules are complex and your circumstances may differ. For personal advice, consult a qualified accountant or tax adviser.