What is Payments on Account? UK Definition 2026/27
Quick Answer
Advance Self Assessment payments equal to 50% of previous years tax bill.
Definition of Payments on Account
Payments on account are advance payments towards your Self Assessment tax bill. You pay 50% of your previous years tax by 31 January and another 50% by 31 July. The next years return calculates the balancing payment (or refund) due by 31 January. Payments on account apply when your tax bill exceeds £1,000 and less than 80% is collected at source.
Payments on Account — Key Facts for 2026/27
| First payment | 31 January |
| Second payment | 31 July |
| Each payment | 50% of previous year |
| Threshold | £1,000 tax bill |
How Payments on Account Works — Example
- 12024/25 tax bill: £10,000
- 231 Jan 2026: Pay £5,000 (1st POA for 2025/26)
- 331 Jul 2026: Pay £5,000 (2nd POA for 2025/26)
- 431 Jan 2027: Balancing payment if 2025/26 bill > £10,000
- 5Plus £5,000 first POA for 2026/27
How Payments on Account Affects Your Tax
Payments on account create cash flow challenges, especially if income drops. You can apply to reduce them if you expect lower income. Plan for the January double-whammy: balancing payment plus first payment on account.
Official HMRC Guidance on Payments 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 Payments on Account
Related Tax Terms
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.