A calm payment on account checklist for the 31 July deadline: check the amount is right, decide whether to reduce it, and pay it so it lands in time.
If you are self-employed, the note in your calendar that just says “tax, 31 July” is about your second payment on account. The deadline is close, so this is a short, calm checklist to run through before you send the money, rather than a lecture on how the system works.
Payments on account are the part of Self Assessment that catches people out most in their first few years of freelancing. The amount rarely matches what you expected, and the whole thing can feel like it appeared from nowhere. Here is what to tick off before you pay, so the money lands on time and against the right account.
It is an advance instalment towards your next tax bill, normally equal to half of what you owed last year, due by midnight on 31 July.
You make two of these each tax year, one on 31 January and one on 31 July. HMRC uses them to collect tax from self-employed people a little earlier, so you pay towards the current year as you go rather than in a single lump the following January. Anything still outstanding is settled in a balancing payment on 31 January.
Do not guess or work from memory. Log in to your HMRC online account, go to the Self Assessment section, and read the amount due by 31 July. That figure is the truth. It also appears on the SA302 tax calculation you saw when you filed your return, listed as the second payment on account.
If you owed, say, £3,000 in income tax and Class 4 National Insurance last year, each payment on account is £1,500. You paid the first £1,500 in January, and the second £1,500 is what is due now.
Payments on account are based on last year. If this year has been quieter, you could be about to overpay and then wait months for the money to come back.
Ask yourself one question: is my income this tax year clearly lower than last year? If a big client left, you took time off, or your rates or hours dropped, the answer might be yes. If trade has been steady or better, leave the figure alone and pay it in full.
If your income really is down, you can ask HMRC to reduce both payments on account. You can do it online in your Self Assessment account, or by sending form SA303. There is no charge for asking.
The catch is that you have to be honest with yourself. If you reduce the payment below what you genuinely end up owing, HMRC charges interest on the shortfall from the original due date. So reduce it to what you realistically expect to owe, not to zero out of hope. If you are unsure, it is usually safer to pay in full and reclaim any overpayment later than to underpay and be charged interest. There is more on this in the guide on how to reduce a payment on account.
A payment on account covers income tax and Class 4 National Insurance only. It does not include your student loan repayment, Class 2 National Insurance, or any Capital Gains Tax. Those are all dealt with in the balancing payment on 31 January, not in the July instalment.
This matters because it explains why the July figure can look smaller than your total tax bill. It is not the whole bill, it is one of two advance slices of part of it.
The deadline is a hard midnight cutoff, so the method you choose matters as much as the amount. Fast options that normally reach HMRC the same day or the next working day:
Slower options to avoid this close to the deadline:
If you are paying on 30 or 31 July, use online banking or a debit card, not a new Direct Debit or a cheque.
When you pay, the reference is your 10-digit Unique Taxpayer Reference followed by the letter K, with no spaces, like 1234567890K. The wrong reference is the single most common reason a payment sits unallocated and does not show against your account.
Take a screenshot of the payment confirmation and note the amount and date. If anything ever looks wrong in your HMRC account later, that record is what sorts it out quickly.
Once the July instalment is paid, put a note in your calendar for 31 January. That is when your next return is due and when the balancing payment, plus your first payment on account for the following year, is taken. Knowing it is coming is half the battle with Self Assessment cash flow.
Priya is a freelance designer. Last year her income tax and Class 4 National Insurance came to £4,200. Her payments on account are therefore £2,100 each. She paid the first £2,100 in January.
This July, before paying, she checks her HMRC account and sees £2,100 due. She has had a steady year, so the figure looks right and she does not reduce it. She pays by debit card on 29 July, uses her UTR followed by K as the reference, screenshots the confirmation, and diarises 31 January for the balancing payment. Ten minutes, done, no drama.
If the money simply is not there, do not ignore the deadline. Pay what you can before midnight on 31 July to reduce the interest, then look at a Time to Pay arrangement, which lets you spread what is left over monthly instalments. The guide on Time to Pay for payments on account walks through how to set one up. HMRC charges interest on late payments on account, but there is no separate late filing penalty, because a payment on account is a payment and not a return.
The mechanics have not changed for 2026. Two payments on account a year, each half of last year’s income tax and Class 4 National Insurance, due 31 January and 31 July, with the £1,000 threshold that decides whether you have to make them at all. If your last Self Assessment bill was under £1,000, or more than 80 per cent of your tax was already collected at source, you would not have payments on account to make.
What has shifted for many people is the route to the information. Your figure, your reference, and your payment history all live in your HMRC online account now, so if you have not logged in for a while, that is the first place to go.
If you want to see what your take-home looks like once tax and National Insurance come out, so the July bill is never a surprise again, the NetPay app works it out from your income as you go. Free to download.
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Check three things. One, that the amount HMRC shows matches half of last year's income tax and Class 4 National Insurance. Two, whether your income this year is lower, in which case you can ask to reduce it. Three, that you are using a payment method that reaches HMRC before midnight on 31 July.
Log in to your HMRC online account and look at the Self Assessment section. It shows the exact figure due by 31 July, which is normally half of your previous year's income tax and Class 4 National Insurance bill. The same figure appears on the SA302 tax calculation from when you filed.
It is your 10-digit Unique Taxpayer Reference followed by the letter K, with no spaces. Using the correct reference is what tells HMRC the money is yours and stops it sitting unallocated, which is the most common reason a payment does not show up against your account.
Yes. You can ask HMRC to reduce both payments on account right up to the deadline and beyond, online through your Self Assessment account or by sending form SA303. Only reduce it if you genuinely expect a lower bill, because if you cut it below what you actually owe, HMRC charges interest on the shortfall.
Want to see your actual take-home pay?
NetPay UK works out your real net pay after tax, NI, pension and salary sacrifice, for hourly, shift and variable-income workers. Free to download.
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A note on financial advice: NetPay UK calculates take-home pay based on official HMRC tax rules. This article reflects rules in force at the time of publication (30 July 2026). Tax rules change. For complex situations, consult a qualified UK accountant or visit gov.uk/income-tax.
