HMRC Payments on Account 2026: What They Are and How to Reduce Them
HMRC Payments on Account are advance payments towards your next Self Assessment bill. If your tax bill exceeds £1,000, you pay 50% on 31 January and 50% on 31 July — based on last year’s bill. For gig workers this means the January deadline can include both a balancing payment for last year AND a payment on account for next year. If your income drops, you can apply to reduce them online in minutes.
Key Takeaways
- Payments on Account trigger when your Self Assessment bill exceeds £1,000
- Two payments per year: 50% on 31 January, 50% on 31 July
- January bill = balancing payment (last year) + first Payment on Account (next year)
- If income drops, apply to reduce online via your HMRC account before the deadline
- Missing a payment triggers interest at Bank of England base rate + 2.5% — no fixed penalty
- You can pay early at any time to stop interest accruing
What Are HMRC Payments on Account?
Payments on Account are advance contributions towards your next year’s tax bill. HMRC requires them when your Self Assessment bill exceeds £1,000 and less than 80% of your tax was collected at source through PAYE. Each payment is 50% of your previous year’s bill.
Most full-time gig workers — Deliveroo, Uber Eats, Amazon Flex, Just Eat — will trigger Payments on Account from their first or second year of filing, because all their income is self-employed with no tax deducted at source.
- Payments on Account cover Income Tax and Class 4 National Insurance only
- Student loan repayments and Capital Gains Tax are excluded from the calculation
- If your bill is under £1,000 you pay the full amount in January only — no advance payments
- If over 80% of your income was taxed through PAYE, Payments on Account do not apply
How Are Payments on Account Calculated?
Each payment is 50% of your previous year’s Self Assessment tax bill (Income Tax + Class 4 NI). If your 2024/25 bill was £3,200, each Payment on Account for 2025/26 is £1,600.
| Previous year’s tax bill | Each payment on account | Total advance payments | Due dates |
|---|---|---|---|
| £1,200 | £600 | £1,200 | 31 Jan + 31 Jul |
| £2,000 | £1,000 | £2,000 | 31 Jan + 31 Jul |
| £3,200 | £1,600 | £3,200 | 31 Jan + 31 Jul |
| £5,000 | £2,500 | £5,000 | 31 Jan + 31 Jul |
| Under £1,000 | No Payments on Account — pay full amount in January only | ||
- HMRC calculates the amounts automatically — they appear on your Self Assessment statement
- If your actual bill for the year is higher than the advance payments, you pay a balancing payment in January
- If your actual bill is lower, HMRC refunds the overpayment or credits it forward
Payment on Account Deadlines 2026
The first Payment on Account for 2025/26 is due 31 January 2026. The second is due 31 July 2026. If your 2025/26 bill is higher than expected, a balancing payment is due 31 January 2027.
| Deadline | What you pay | Amount |
|---|---|---|
| 31 January 2026 | Balancing payment (2024/25) + 1st POA (2025/26) | Actual bill + 50% of previous bill |
| 31 July 2026 | 2nd Payment on Account (2025/26) | 50% of previous bill |
| 31 January 2027 | Balancing payment (2025/26) + 1st POA (2026/27) | Actual bill difference + 50% of 2025/26 bill |
| 31 July 2027 | 2nd Payment on Account (2026/27) | 50% of 2025/26 bill |
| Interest on late payments | Bank of England base rate + 2.5% from due date | |
Why Is the January Tax Bill So Large for Gig Workers?
The January bill combines three things: the balancing payment for last year, the first Payment on Account for next year, and any student loan or other deductions. A gig worker with a £3,200 bill for 2024/25 could face up to £4,800 in January 2026 if their income stayed the same.
This surprises many first-year gig workers who expect to pay only what they owe for the past year. In reality, HMRC collects up to 1.5× the annual bill in the first January payment.
- Year 1 January: full 2024/25 bill + 50% advance for 2025/26
- Year 1 July: remaining 50% advance for 2025/26
- Year 2 January: balancing payment only (if bill matches advance) or top-up
- Solution: set aside 25–30% of monthly earnings throughout the year
- Use our tax calculator in October to estimate your January bill in advance
How Can Gig Workers Reduce Payments on Account?
If you expect lower income this year than last — fewer shifts, a new main job, or reduced platform activity — you can apply to reduce your Payments on Account online before the deadline. HMRC will adjust both payments to your estimated figure.
- Log in to your HMRC Personal Tax Account or Self Assessment account
- Go to “Reduce payments on account” and enter your estimated tax bill for the year
- HMRC recalculates both payments based on your new estimate
- Risk: if you underestimate and your actual bill is higher, HMRC charges interest on the shortfall from the original due date
- Only reduce if you are confident income is genuinely lower — not just to defer payment
Step-by-Step: How to Apply to Reduce Payments on Account
The application takes under 5 minutes online. You need your Government Gateway login and an estimate of your current year’s tax bill. Apply before 31 January (first payment) or 31 July (second payment) for the reduction to take effect.
- Log in to HMRC Self Assessment online via Government Gateway
- Select “View your Self Assessment tax account”
- Find the Payments on Account section and click “Claim to reduce payments on account”
- Enter your estimated Income Tax and Class 4 NI for the current tax year
- HMRC shows the revised payment amounts — confirm and submit
- Print or save the confirmation — you may need it if HMRC queries the reduction later
- Pay the reduced amount by the deadline via HMRC’s online payment service
Frequently Asked Questions
What is a Payment on Account to HMRC?
An advance payment towards your next Self Assessment bill. HMRC requires two per year — 50% on 31 January and 50% on 31 July — based on your previous year’s tax bill.
When do Payments on Account start?
When your Self Assessment bill exceeds £1,000 and less than 80% of your tax was collected through PAYE. Most full-time gig workers trigger them from their first or second year of filing.
How do I reduce my Payments on Account?
Log in to your HMRC Self Assessment account, select “Reduce payments on account”, and enter your estimated bill. If you underestimate, HMRC charges interest on the shortfall.
What happens if I miss a Payment on Account deadline?
HMRC charges daily interest at Bank of England base rate + 2.5% from the due date. There is no fixed penalty for missing Payments on Account — only interest.
Do gig workers have to make Payments on Account?
Yes, if your Self Assessment bill exceeds £1,000. Most full-time Deliveroo, Uber Eats, and Amazon Flex drivers will trigger them from their first or second year.
Can I pay Payments on Account early?
Yes. You can pay at any time via HMRC online banking, direct debit, or debit card. Paying early stops interest and helps you budget.
What is a balancing payment in Self Assessment?
The top-up due on 31 January if your actual tax bill is higher than your two advance payments. If lower, HMRC refunds the overpayment.
Tax compliance specialist since 2017. Helped 5,000+ freelancers and self-employed workers understand HMRC Payments on Account and Self Assessment rules.