Missing a Self Assessment payment deadline can cost you more than just sleep. Between late payment penalties, daily interest charges, and the confusion around payments on account, many small business owners find themselves caught out each January and July. This guide walks you through exactly what’s due, when it’s due, and how to avoid expensive mistakes.
Self Assessment payment due dates at a glance
The UK Self Assessment system revolves around two major payment deadlines: 31 January and 31 July. Most self-employed individuals and company directors will need to make at least one payment each year, whilst those with higher tax bills face obligations on both dates.
On 31 January, you’ll typically pay any outstanding tax from the previous year (the “balancing payment”) plus the first installment towards the current year’s liability. Then, six months later on 31 July, the second instalment falls due. Understanding when is self assessment due helps you plan cash flow and avoid unnecessary penalties – crucial for any small business managing tight margins.
Key deadlines by tax year
For the 2025/26 tax year (which covers income from 6 April 2025 to 5 April 2026), here’s what you’re working towards:
- 31 October 2026: Deadline for paper Self Assessment returns
- 31 January 2027: Deadline for online returns, balancing payment for 2025/26, and first payment on account for 2026/27
- 31 July 2027: Second payment on account for 2026/27
These dates repeat annually, always anchored to the tax year end of 5 April.
What the UK “tax year” means
The UK tax year runs from 6 April one year to 5 April the next. So the 2025/26 tax year covers all income and gains you received between 6 April 2025 and 5 April 2026. This quirky timing dates back centuries, but it means your Self Assessment return filed in January 2027 reports on income you earned nearly a year earlier.
Filing vs payment deadlines
Don’t confuse when you must file your return with when you must pay your tax bill. You can submit your online return any time before midnight on 31 January, but payment must reach HMRC by the same date. Filing early gives you more time to arrange funds, check calculations, and sort out any unexpected liabilities.
Paper returns have an earlier deadline of 31 October, though HMRC strongly encourages online filing. Most accountants and business owners file digitally because it’s faster and you get instant calculations.
When a deadline falls on a weekend or bank holiday
If 31 January or 31 July falls on a weekend or bank holiday, the deadline shifts to the next working day. However, you should never cut it that fine. Bank transfers can take time to clear, particularly if you’re using Bacs rather than Faster Payments. Arrange payment at least three working days early to ensure HMRC receives cleared funds by the due date.
What is due on 31 January?
For most taxpayers, 31 January is the big one. It’s the date your Self Assessment return must be filed and when substantial payments hit your account.
Balancing payment for the previous tax year
The balancing payment settles any remaining Income Tax and Class 4 National Insurance from the tax year that ended the previous April. HMRC calculates your total liability, deducts anything already paid through PAYE or earlier payments on account, and the remainder is due on 31 January.
If you earned £50,000 in self-employed profits during 2025/26 and paid £8,000 through payments on account, but your actual tax bill came to £10,000, you’d owe a £2,000 balancing payment on 31 January 2027.
First payment on account for the current tax year
On top of the balancing payment, most people must also pay the first payment on account towards the current tax year on 31 January. This is essentially a prepayment – HMRC assumes your income will be similar to last year and asks for half your previous year’s liability upfront.
So in the example above, where your 2025/26 tax bill was £10,000, you’d pay £5,000 on 31 January 2027 as the first payment on account for 2026/27. That means on 31 January, you’re paying both the £2,000 balancing payment and the £5,000 payment on account – £7,000 in total.
National Insurance and student loans in January
Class 2 and Class 4 National Insurance contributions for the self-employed are collected through Self Assessment and included in your January payment. Class 2 is a flat weekly amount (£3.45 per week for 2025/26 if profits exceed £6,725), whilst Class 4 is percentage-based on profits above £12,570.
If you’re repaying a student loan, those amounts also appear on your tax calculation and are due on 31 January. However, student loan repayments are not included when calculating payments on account – more on that shortly.
What is due on 31 July?
The second payment deadline often catches people off guard, particularly in their first year of Self Assessment.
Second payment on account
On 31 July, you pay the second installment towards the current tax year. This is normally another 50% of last year’s liability (the same amount you paid in January). Using the earlier example, that’s another £5,000 due on 31 July 2027.
These two payments on account – January and July – are advance payments. When you file your return the following January, HMRC compares what you actually owe against what you’ve already paid. If you’ve overpaid, you get a refund or credit. If you’ve underpaid, there’s a balancing payment due.
Who does not have payments on account
Not everyone faces payments on account. You’re exempt if:
- Your previous year’s Self Assessment tax bill (after deducting tax paid at source) was less than £1,000, or
- More than 80% of your tax was already collected through PAYE
These exemptions typically cover people with small side incomes, landlords with modest rental profits, or employees with minor untaxed income. If your Self Assessment bill is only a few hundred pounds, you’ll just pay the balancing amount in January with no July payment.
Payments on account explained
The payments on account system exists because HMRC wants tax collected closer to when you earn the income, rather than waiting until the following January. It’s similar to how employees pay tax monthly through PAYE.
Who must make payments on account
You’ll make payments on account if your last Self Assessment showed a tax liability exceeding £1,000 after deducting any tax already collected at source (such as PAYE or tax on savings interest), and less than 80% of your total bill was collected through PAYE.
Typical scenarios include:
- Self-employed individuals and freelancers with no PAYE income
- Company directors taking dividends alongside modest salaries
- Landlords with significant rental income
- Anyone with large amounts of untaxed investment income
The £1,000 threshold and 80% PAYE rule
Both conditions must be true for payments on account to apply. Let’s say your Self Assessment bill was £1,200 but £900 had already been deducted through PAYE on your salary. That’s only £300 outstanding, so you’d pay £300 in January with no payments on account.
Conversely, if you earned £60,000 in dividends and paid £9,000 in tax, none of which was collected via PAYE, you’d pay £4,500 on 31 January and another £4,500 on 31 July.
New to Self Assessment: first-year rules
In your first year of Self Assessment, you won’t have prior-year figures, so there are no payments on account due in that first July. However, come the second January, you’ll face a “payment shock”: the balancing payment for year one plus the first payment on account for year two.
Many newly self-employed contractors or freelancers get caught here. After paying perhaps £6,000 in their first January, they assume it’s done – only to discover another £3,000 due six months later.
How payments on account are calculated
The calculation is straightforward: take your previous year’s Income Tax and Class 4 National Insurance liability, divide by two, and pay one half in January and one half in July.
What’s included and excluded
Included: Income Tax on self-employment profits, rental income, untaxed savings and dividend income, plus Class 4 National Insurance contributions.
Excluded: Capital Gains Tax, Class 2 National Insurance (the flat weekly amount), student loan repayments, and the High Income Child Benefit Charge.
This is important. If you sold a property and paid £20,000 in Capital Gains Tax last year, that £20,000 does not form part of your payments on account calculation. CGT is settled separately in January.
Example calculation with numbers
Imagine your 2025/26 Self Assessment showed:
- Income Tax: £8,000
- Class 4 National Insurance: £1,500
- Class 2 National Insurance: £179
- Capital Gains Tax: £3,000
Your total bill is £12,679. But for payments on account purposes, you only count the Income Tax and Class 4 NIC: £8,000 + £1,500 = £9,500.
On 31 January 2027, you’d pay:
- Balancing payment: £12,679 (everything due for 2025/26)
- First payment on account: £4,750 (half of £9,500)
- Total: £17,429
Then on 31 July 2027:
- Second payment on account: £4,750
Rolling forward each year
Each year, your payments on account are recalculated based on the most recent return. If your income drops, your payments on account will naturally reduce the following year. If it rises, they’ll increase. This rolling mechanism means payments on account broadly track your actual income over time.
Balancing payments
A balancing payment arises when the tax you actually owe exceeds what you’ve already paid through payments on account or PAYE.
What triggers a balancing payment
Common triggers include:
- Your income increased compared to the previous year
- You claimed fewer tax reliefs than anticipated
- You had additional income not reflected in last year’s figures (such as Capital Gains Tax)
- You reduced your payments on account but underestimated your liability
If your actual tax bill for 2025/26 is £12,000 but you only paid £10,000 through payments on account, you’ll owe a £2,000 balancing payment on 31 January 2027.
Higher or lower than expected
Sometimes your balancing payment is larger than expected – perhaps your business had a strong year or you forgot about a bonus. Other times you’ll have overpaid, particularly if income fell or you claimed reliefs not anticipated in the payment on account calculation. In the latter case, HMRC will either refund the overpayment or set it against future liabilities.
Reducing payments on account
If you know your current year’s income will be lower than last year’s, you can apply to reduce your payments on account. This frees up cash flow but comes with risks.
When and how to reduce (online or SA303)
You can reduce payments on account through your HMRC online account or by submitting form SA303. The process is straightforward: estimate your current year’s liability and request that your payments on account reflect the lower figure rather than last year’s.
For instance, if last year’s bill was £10,000 but you expect this year’s to be only £6,000, you can reduce each payment on account from £5,000 to £3,000.
Evidence you should keep
Keep detailed records justifying any reduction: profit forecasts, cash flow projections, management accounts, or correspondence with your accountant. If HMRC queries your decision later, you’ll need to demonstrate you had reasonable grounds for the reduction.
Risks if you reduce too much
If you reduce payments on account too aggressively and it turns out your income was higher than estimated, you’ll owe a balancing payment plus interest on the underpaid amount. Interest runs from the date each payment on account was originally due (31 January and 31 July) until you settle the shortfall.
HMRC may also charge penalties if they believe the reduction wasn’t made on a reasonable basis. Genuine business downturns are fine; speculative or hopeful reductions are not.
Reducing after you’ve paid
If you’ve already made a payment on account but then realise you’ve overpaid, you can still request a reduction. HMRC will either credit your account or issue a refund. The credit can be reallocated to offset other tax liabilities or simply held until you file your return the following January.
Amendments to the return and their impact
Filed your return but discovered an error? You can amend it within twelve months of the filing deadline (so up to 31 January 2028 for a 2025/26 return filed in January 2027).
Extra tax due after an amendment
If your amendment increases your tax liability, interest will run from the original due date (31 January), not from when you made the amendment. This can add up quickly if you amend many months later.
Overpayments and refunds
Amendments that reduce your liability result in a refund or credit. HMRC typically processes these within a few weeks, either sending a cheque or repaying directly to your bank account if you’ve provided details.
How and when to pay HMRC
Getting money to HMRC on time requires planning. Different payment methods have different processing times, and cutting it fine can leave you liable for late payment penalties even if you thought you’d paid “on time”. Modern business accounts like ANNA Money help small business owners manage these payments efficiently alongside invoicing and bookkeeping, making it easier to stay on top of tax deadlines and maintain accurate records.
Accepted payment methods and processing times
HMRC accepts several payment routes, each with distinct timings.
Faster Payments, CHAPS, and Bacs
Most people pay by bank transfer:
- Faster Payments: Same-day if sent before your bank’s cut-off (often 3pm or 6pm). Most banks process these instantly, but allow a buffer.
- CHAPS: Same-day guaranteed, but your bank may charge £25–£35. Use this if you’re genuinely down to the wire.
- Bacs: Takes three working days. Not suitable near deadlines unless you plan well in advance.
Always use your Unique Taxpayer Reference (UTR) followed by the letter K as your payment reference.
Direct Debit set-up times
You can set up a Direct Debit through your HMRC online account. First-time setup takes around five working days before the deadline. Once established, HMRC will collect payment approximately three working days before the due date, so funds must be in your account well in advance.
Direct Debits work well for people who want HMRC to handle the mechanics automatically.
Paying by debit or corporate credit card
You can pay online using a debit card or corporate credit card at no extra charge. Personal credit cards are not accepted. Card payments process immediately, so you can pay right up to the midnight deadline if absolutely necessary (though this is not advisable).
Paying by cheque by post
Cheques are still accepted but must reach HMRC by the due date. Given postal delays, you should post at least five working days early. Include a payslip (from your tax calculation) and write your UTR on the back of the cheque. Cheques carry real risk – if they go astray or arrive late, you’re liable for penalties.
Your payment reference
Using the correct payment reference ensures HMRC allocates your payment to the right account. Get this wrong and your payment might sit unallocated, triggering penalty notices even though you’ve paid.
UTR with the ‘K’ suffix
Your reference is your eleven-digit Unique Taxpayer Reference followed by the letter K. So if your UTR is 1234567890, your payment reference is 1234567890K.
You’ll find your UTR on your tax return, on letters from HMRC, and in your HMRC online account. Double-check you’ve typed it correctly before authorising the payment.
One reference per person, not per bill
Use the same reference regardless of whether you’re paying a balancing payment, a payment on account, or settling penalties. HMRC will allocate incoming funds to outstanding liabilities automatically. If you accidentally use the wrong reference (or forget the K), contact HMRC’s helpline to have the payment reallocated.
Budget Payment Plan (weekly or monthly in advance)
HMRC offers a Budget Payment Plan that lets you spread payments over the year, reducing the 31 January sting.
How to set it up and who can use it
Log into your HMRC online account and set up weekly or monthly standing orders. You choose how much to pay and when. There’s no formal approval process – you simply start paying, and the funds sit on your HMRC account until the January or July deadlines.
This works well if you prefer steady cash management rather than two large lump sums.
Interaction with payments on account and Time to Pay
A Budget Payment Plan is not a payment arrangement or Time to Pay agreement. You’re paying before the deadline, so there are no interest charges or penalties. Come 31 January, HMRC deducts what’s due from the credit balance you’ve built up. If you’ve overpaid, the surplus rolls forward or can be refunded.
This differs from Time to Pay (covered below), which is a formal instalment plan agreed after the deadline when you can’t pay in full.
Time to Pay arrangements (if you cannot pay)
If you genuinely cannot afford to pay your Self Assessment bill by the deadline, you may be able to arrange a payment plan with HMRC.
Eligibility, limits, and how to apply
You can apply online if:
- You owe £30,000 or less
- Your tax returns are up to date
- You don’t already have a Time to Pay arrangement or other tax debts
The online service lets you set up monthly instalments over 6–12 months. For debts above £30,000 or more complex situations, call HMRC’s Self Assessment helpline.
Interest and penalties under Time to Pay
Time to Pay does not stop interest from accruing. You’ll pay daily interest from the original deadline until the debt is cleared. However, HMRC may reduce or waive late payment penalties if you set up a plan quickly and stick to it.
Keeping to the plan
Miss an instalment and HMRC can cancel the arrangement and demand payment in full. If your circumstances change – perhaps business improves or worsens – contact HMRC immediately. They’re usually willing to adjust the plan rather than see you default.
Coding out small debts through PAYE
If you have a small Self Assessment debt and you’re also employed or receive a pension, HMRC might “code out” the debt through your PAYE code.
The £3,000 cap and 30 December deadline
Coding out is available if:
- Your debt is under £3,000
- You earn enough through PAYE to collect the liability without pushing you below the National Minimum Wage
- You apply by 30 December (before the 31 January deadline)
HMRC will adjust your tax code so extra tax is deducted monthly from your salary or pension over the following tax year. This spreads the cost rather than requiring a lump sum in January.
When coding out is not available
Coding out won’t be offered if you have no PAYE income, earn too little to safely collect the debt, or miss the 30 December deadline. It’s also unavailable for larger debts or if you already have significant adjustments in your tax code.
What happens if you pay late
Miss the 31 January or 31 July deadlines and the costs mount quickly.
Interest charges
HMRC charges interest on late payments from the day after the deadline until you pay. The rate changes periodically (currently around 8% per annum as of early 2026, though check HMRC’s website for the latest).
When interest starts and how it’s calculated
Interest accrues daily and compounds. So if you owe £5,000 and pay two months late, you’ll pay approximately £66 in interest at 8% per annum. The longer you delay, the more expensive it gets.
How to stop interest accruing
Pay as much as you can, as soon as you can. Even a partial payment reduces the balance on which interest accrues. If you’re arranging a Time to Pay plan, do so quickly – interest will continue, but penalties might be reduced.
Late payment penalties
On top of interest, HMRC imposes penalties at fixed intervals.
30 days, 6 months, 12 months
- 30 days late: 5% of the unpaid tax
- 6 months late: Another 5% of the tax still unpaid at that point
- 12 months late: A further 5% of the tax still unpaid
These penalties stack. If you owe £10,000 and don’t pay at all, you’ll face £500 after 30 days, another £500 at six months (on whatever’s still owed), and another £500 at twelve months.
Appealing a penalty
You can appeal if you have a “reasonable excuse” – such as a serious illness, bereavement, or IT failure at HMRC. Write to HMRC explaining the circumstances and providing evidence. Appeals must be made within 30 days of the penalty notice.
Late filing vs late payment
It’s crucial to understand that filing late and paying late trigger separate penalty regimes.
Separate regimes that stack
Late filing penalties start at £100 (immediately after 31 January) and escalate if you file more than three months late (£10 per day), six months late (£300 or 5% of the tax due, whichever is higher), and twelve months late (another £300 or 5%, or in serious cases up to 100% of the tax due).
Late payment penalties are entirely separate and apply regardless of whether you filed on time.
File even if you can’t pay
Always file your return on time, even if you can’t pay. This avoids the filing penalties and gives you a better position from which to negotiate a Time to Pay arrangement. Filing shows good faith and limits the overall cost.
Special cases and common scenarios
Not everyone’s tax situation fits the standard pattern. Here are common variations that change when and how much you pay.
Switching from employment to self-employment mid-year
Tax already paid through PAYE is credited against your total liability. If you earned £30,000 as an employee (paying £3,500 in PAYE tax) then £20,000 self-employed (owing £2,000 in tax), your total liability is £5,500. HMRC deducts the £3,500 already paid, leaving £2,000 due in January.
Low tax bills and no payments on account
If your Self Assessment liability is under £1,000, or more than 80% was already collected through PAYE, you just pay the balancing amount in January with no July payment. This typically applies to employees with modest freelance income or landlords with small rental profits.
High earners with complex income
If you’re earning from multiple sources – salary, dividends, rental income, savings interest – your balancing payments can be substantial. High earners often face restrictions on personal allowances and pension reliefs, which inflate the tax bill. Consider quarterly profit reviews and set aside 30–40% of profits in a separate account to cover tax bills.
Capital Gains Tax and property disposals
Capital Gains Tax operates on a different timetable and isn’t included in payments on account. If you sell UK residential property, you must report the gain and pay any CGT within 60 days of completion – separate from your annual Self Assessment. When you file in January and pay CGT, that amount doesn’t inflate your payments on account for the following year.
Non-residents and expats
UK tax obligations don’t disappear if you live abroad. Non-residents with UK income still file Self Assessment and face the same deadlines. Arrange international transfers well in advance – they can take several days and incur bank charges. HMRC won’t accept “my bank took five days” as a reasonable excuse.
Partnerships and partners
The partnership submits a separate partnership return, but individual partners are responsible for their own tax. Each partner includes their share of the profit on their personal Self Assessment and pays their own Income Tax and National Insurance – there’s no such thing as “partnership tax”.
Class 2 National Insurance for the self-employed
For 2025/26, if your profits exceed £6,725, you’ll pay Class 2 at £3.45 per week. If profits are below that threshold, Class 2 is voluntary – but paying it protects your state pension and other contributory benefits.
Student Loan and Postgraduate Loan
Student loan repayments are included in your Self Assessment bill and due on 31 January, but they’re not included when calculating payments on account. The repayment appears as a balancing item each January.
Checking your HMRC account
Log into your HMRC online account regularly to check amounts due, confirm payments have been allocated correctly, review payment on account calculations, and spot any penalties early. If anything looks wrong, contact HMRC immediately.
Worked examples and timelines
Numbers bring clarity. Here are three scenarios showing how payments on account work in practice.
First year in Self Assessment with payments on account
Scenario: Emma went self-employed in April 2025. Her profits for 2025/26 were £35,000, resulting in Income Tax of £4,486 and Class 4 NIC of £1,348. Total: £5,834, plus Class 2 NIC of £179.
31 January 2027:
- Balancing payment: £6,013 (all tax and NIC for 2025/26)
- First payment on account for 2026/27: £2,917 (half of £5,834)
- Total due: £8,930
31 July 2027:
- Second payment on account: £2,917
Total paid over twelve months: £11,847
When Emma files her 2026/27 return in January 2028, HMRC will compare her actual liability with the £5,834 she’s already paid. If her income stayed similar, there’ll be little or no balancing payment.
Important: First-year Self Assessment filers often face a “payment shock” in their second January when both the balancing payment and first payment on account fall due together. Budget carefully and consider setting aside funds monthly.
Calendar view of cash flows
DatePaymentAmount31 Jan 2027Balancing + POA 1£8,93031 Jul 2027POA 2£2,91731 Jan 2028Balancing + POA 1 (for 2027/28)TBC
Reducing income year-on-year
Scenario: James earned £60,000 in 2024/25, paying £11,500 in tax and NIC. His payments on account for 2025/26 were £5,750 in January 2026 and £5,750 in July 2026. However, his 2025/26 income dropped to £40,000, with an actual liability of £7,000.
31 January 2027:
He’s already paid £11,500 through payments on account but only owes £7,000. HMRC will refund £4,500 or set it against future liabilities.
His payments on account for 2026/27 are recalculated based on the £7,000 figure: £3,500 in January 2027 and £3,500 in July 2027.
What if James had reduced his payments on account mid-year?
If James had realised in March 2026 that his income would fall, he could have reduced his July 2026 payment on account from £5,750 to, say, £3,500. This would have freed up £2,250 in cash flow. As long as the reduction was reasonable, there’s no penalty. If he’d been too aggressive and his actual income turned out higher, he’d owe interest on the shortfall.
Example of reductions and interest
Suppose James reduced to £3,000 per payment (total £6,000 paid on account) but his actual liability was £8,000. He’d owe a £2,000 balancing payment plus interest on the £1,000 underpaid in January and the £1,000 underpaid in July, running from each respective deadline until 31 January 2027.
Increasing income year-on-year
Scenario: Priya’s 2024/25 income was £50,000, with a tax bill of £9,000. She paid £4,500 on 31 January 2026 and £4,500 on 31 July 2026. But in 2025/26, her business boomed and she earned £70,000, with an actual liability of £14,000.
31 January 2027:
- She’s already paid £9,000 through payments on account
- She owes £14,000 in total
- Balancing payment: £5,000
- First payment on account for 2026/27: £7,000 (half of £14,000)
- Total due: £12,000
31 July 2027:
- Second payment on account: £7,000
Adjusted POA for the following year
Priya’s payments on account have jumped from £4,500 to £7,000 each, reflecting her higher income. If she expects 2026/27 to be another strong year, this makes sense. If she thinks it was a one-off spike, she can reduce her payments on account – but she’ll need to justify that decision and keep evidence.
Checklist before each deadline6–8 weeks before 31 January
- Gather all income records, receipts, and expense documentation
- Complete your Self Assessment return or send everything to your accountant
- Check payments on account are correct and consider reductions if income has fallen
- Set up payment method – Direct Debit takes five working days
- Confirm your UTR and payment reference
- Set aside cash in a separate account
Critical reminder: Always pay at least three working days before the deadline to ensure cleared funds reach HMRC. Bank transfers, even Faster Payments, can experience delays. Missing the deadline by hours still triggers penalties and interest.
1–2 weeks before 31 July
- Log into your HMRC account and confirm the payment on account amount
- Check your bank balance and ensure sufficient funds
- Arrange payment at least three working days early
- Double-check your payment reference (UTR + K)
- If using Direct Debit, verify it’s still active
FAQ
Does HMRC extend the 31 January deadline in severe weather or system outages?
Very rarely, and only for widespread system failures on HMRC’s end. Severe weather affecting an individual is not considered a reasonable excuse. If you genuinely can’t file or pay, contact HMRC immediately and document everything.
Can I split my January bill across multiple bank accounts or cards?
Yes. Make multiple payments using the same reference (your UTR + K) and HMRC will aggregate them. Just ensure the total reaches them by the deadline.
Will HMRC text or email me payment reminders?
HMRC sends reminders if you’ve opted in, but genuine messages never include clickable payment links. Always log into your HMRC account directly through GOV.UK rather than clicking email links.
Understanding Self Assessment payment deadlines isn’t just about avoiding penalties – it’s about maintaining control over your cash flow and planning your business finances effectively. Mark 31 January and 31 July in your calendar now, set aside funds regularly, and file early to give yourself maximum flexibility. With the right preparation, these deadlines become manageable milestones rather than financial shocks.
