Payments on account, explained
Worked example: £40,000 profit in 2026/27
A sole trader in England with £40,000 profit owes £5,486.00 Income Tax and £1,645.80 Class 4 NI, a bill of £7,131.80. Each payment on account is half of that, £3,565.90.
| Date | What is due | Amount |
|---|---|---|
| 31 January 2028 | 2026/27 bill plus first payment on account for 2027/28 | £10,697.70 |
| 31 July 2028 | Second payment on account for 2027/28 | £3,565.90 |
| 31 January 2029 | Any balance for 2027/28 plus first payment for 2028/29 | depends on profit |
This is the first-year shock: the January after your first year you pay a year and a half of tax at once. If you started trading in 2026/27 and had no payments on account before, plan for £10,697.70 that January.
What is included
Income Tax and Class 4 National Insurance. Student loan repayments and capital gains tax are not included; they go into the January balancing payment.
When you do not need them
- Your last Self Assessment bill was less than £1,000.
- More than 80% of last year's tax was taken at source, for example through your salary or pension.
If your income is falling
Payments on account assume this year looks like last year. If you expect lower profit, you can ask HMRC to reduce them through your online account or with form SA303. If you reduce them too far, HMRC charges interest on the shortfall.
Work out your own figures
The self-employed tax calculator shows your payments on account and your first January bill. See typical figures at £30,000, £50,000 and £80,000 profit.
Frequently asked questions
Are payments on account extra tax?
No. They are next year's tax paid early. Each January the balancing payment settles the difference, or HMRC refunds you if you paid too much.
I have a job and a small side business. Do I pay them?
Only if the Self Assessment bill is £1,000 or more and 80% or less of your total tax was paid through PAYE. If more than 80% was collected at source, no payments on account are needed.
Source: gov.uk Understand your Self Assessment tax bill: payments on account. Updated 2026-11-04. General information, not tax advice.