Simply Business homepage
  • Business insurance

    • Business Insurance FAQs

    Business insurance covers

  • Support
  • Claims
  • Sign In
Call Us0333 0146 683
Chat With UsChat support 24/7

Self Assessment payment on account – a guide for the self-employed

5-minute read

Man in glasses sitting at table and doing business calculations
Sam Bromley

Sam Bromley

21 November 2023

Share on FacebookShare on TwitterShare on LinkedIn

Payment on account refers to additional Self Assessment payments that self-employed people need to make towards their next tax bill.

What is payment on account?

Payments on account are tax payments made twice a year by self-employed Self Assessment taxpayers to spread the cost of the upcoming year’s tax.

They’re calculated based on your previous year’s tax bill. In other words, HMRC is making a prediction about your future income based on your past income. They’re due in two instalments – the deadlines are 31 January and 31 July.

This means the first instalment is due on the same day you submit your Self Assessment tax return and clear your bill for the previous year, so it’s important you have enough money set aside.

What does payment on account mean?

The payment on account meaning is simple – it allows self-employed people to make two advance payments towards their tax bill each year.

HMRC has designed tax payment on account to help the self-employed stay on top of their payments – and so that they don’t benefit too much from paying tax in arrears.

Whereas employed people are taxed at source through PAYE, the self-employed don’t pay their tax bill until the January after the end of the previous tax year.

But payment on account ends up catching many newly self-employed people out. It’s easy to see why – after the annual rush to complete a Self Assessment, it’s not fun to be presented with a bill that’s a lot higher than you’re expecting.

And while in theory tax payment on account helps the self-employed spread out their bill, it can lead to more financial hardship for those who’re already having difficulty paying.

Here’s a payment on account example

Each of the two payments on account will normally be 50 per cent of your previous tax bill. uses this example calculation:

Jeremy, a self-employed cleaner, has a £3,000 tax bill for the 2022 to 2023 tax year. He made two payments on account last year of £900 each (£1,800 in total).

The total tax to pay by midnight on 31 January 2024 is £2,700. This includes:

  • a ‘balancing payment’ of £1,200 for the 2022 to 2023 tax year (£3,000 minus £1,800)
  • the first payment on account of £1,500 (half Jeremy's 2022 to 2023 tax bill) towards his 2023 to 2024 tax bill
  • he has to pay his second payment on account of £1,500 by midnight on 31 July 2024

If his tax bill for the 2023 to 2024 tax year is more than £3,000 (the total of your two payments on account), he will need to make a ‘balancing payment’ to settle the bill by 31 January 2025.

Payments on account include Class 4 National Insurance Contributions where applicable, but not student loan repayments or capital gains tax.

You won’t need to make a payment on account to HMRC if:

  • your tax bill for the previous year was less than £1,000 after PAYE
  • 80 per cent or more of your tax was deducted at source through PAYE

Get your free guide on completing your tax return

Download your free in-depth guide to completing your self-employed tax return. Why not save it and refer back to the guide when filling in your Self Assessment?


How to pay your payment on account

You’ll need to use your payment reference when you pay your payment on account. This is your Unique Taxpayer Reference (UTR) number followed by the letter ‘K’.

Here’s how you can pay your Self Assessment payment on account:

  • online using a debit card or corporate credit card
  • bank transfer (online or phone banking) or Direct Debit (make sure you leave enough time for a Direct Debit to go through – five working days the first time you set one up, or three the next time you pay using the same bank details)
  • at your bank or building society (if you still get paper statements from HMRC, or you have the paying-in slip HMRC sent you)
  • by cheque through the post

Read more about the methods for paying your Self Assessment.

As mentioned, you’ll need to make your first payment on account by 31 January, giving you the opportunity to pay at the same time as clearing your bill for the previous tax year.

You’ll then have to remember to make your second payment on account by 31 July.

If you file your return on paper, you’ll get a paper bill along with a Bank Giro form that you can use to make a payment.

HMRC is committed to moving as much of the tax paying process online as possible. This means that from April 2026, Self Assessment taxpayers will need to keep digital records and send returns using the appropriate software.

Can you reduce payments on account?

From builders to craft businesses, all self-employed people's income can fluctuate from year to year. If you think that your income for the next tax year will be lower than the previous tax year, you can apply to have HMRC reduce payment on account for your business.

You can reduce payment on account by logging into your online HMRC account and clicking 'Reduce payments on account'. Or, you can send form SA303 to your tax office.

In practice, many people choose to do this if they’re having trouble paying their tax bill. Some reduce their HMRC payment on account, presuming they’ll be in better financial shape later and that they’ll find it easier to settle the remainder of their bill.

But you should think carefully about this – if your income is the same or higher in the next tax year, you’ll still have to pay the same amount, meaning you’ve only delayed the burden.

And if you reduce your payment on account and it then turns out you’ve underpaid, you’ll have to pay interest on the outstanding amount. This can significantly increase your tax bill.

What happens if you overpay?

On the other hand, if you overpay, you’ll receive an HMRC payment on account refund.

You can use form SA303 to reduce your payments on account and request a refund. Credit should then show up in your Self Assessment account, which you can then request to be repaid either online or by calling HMRC.

Check your payments on account

As well as using a payment on account calculator, you can check your payments on account during the year by signing in to your personal tax account using your Government Gateway ID and selecting the option to view your latest Self Assessment return.

Click 'View statements' and you'll see any payments on account you've already made, alongside payments you need to make towards your next tax bill.

If you’re having trouble paying, don’t ignore the situation. It’s important that you get in touch with HMRC – you might be able to use HMRC’s Time to Pay service to set up a payment arrangement.

Paying your tax bill in instalments

You can make regular payments towards your tax bill with a budget payment plan if you'd like to. This can take the pressure off setting aside enough for two tax bill payments a year.

You also have the option to pause these regular payments for up to six months if you need to.

To set this up, you just need to sign into your HMRC account and select the 'budget payment plan' when you choose to make Direct Debit payments.

Check which payment plan is right for you with the government's handy tool.

As ever with tax, if you’re unsure, you should get in touch with an accountant or HMRC directly for guidance. Please use this article as a guide only.

Get small business guides and news straight to your inbox

Your email address will be used by Simply Business so that we can send you the latest guides, offers and tips. You can unsubscribe from these emails at any time. For more information, check out the Simply Business privacy policy.

Ready to set up your cover?

As one of the UK's biggest business insurance providers, we specialise in public liability insurance and protect more trades than anybody else. Why not take a look now and build a quick, tailored quote?

Start your quote
Photograph: VAKSMANV/
Sam Bromley

Written by

Sam Bromley

Sam has more than 10 years of experience in writing for financial services. He specialises in illuminating complicated topics, from IR35 to ISAs, and identifying emerging trends that audiences want to know about. Sam spent five years at Simply Business, where he was Senior Copywriter.

We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer

Find this article useful? Spread the word.

Share on Facebook
Share on Twitter
Share on LinkedIn

Keep up to date with Simply Business. Subscribe to our monthly newsletter and follow us on social media.

Subscribe to our newsletter


HomePopular articlesGeneral businessGuestInsuranceLandlordLandlord resourcesLegal and financeMarketingNewsOpinionProperty maintenanceTradesmanCovid-19 business support hub


Public liability insuranceBusiness insuranceProfessional indemnity insuranceEmployers’ liability insuranceLandlord insuranceTradesman insuranceSelf-employed insuranceRestaurant insuranceVan insuranceInsurers


About usOur teamAwardsPress releasesPartners & affiliatesOur charitable workModern Slavery ActSection 172 statementSocial mediaSite map

Customer support

Contact & supportPolicy renewalMake a claimProof of policyComplaintsAccessibility


6th Floor99 Gresham StreetLondonEC2V 7NG

Northampton 900900 Pavilion DriveNorthamptonNN4 7RG


Careers at Simply BusinessTech careersCurrent opportunities


BenefitsRefer a friend


Terms & conditionsPrivacy policyCookie policyVuln Disclosure policy


Knowledge centreOpinionsMicrosites

© Copyright 2024 Simply Business. All Rights Reserved. Simply Business is a trading name of Xbridge Limited which is authorised and regulated by the Financial Conduct Authority (Financial Services Registration No: 313348). Xbridge Limited (No: 3967717) has its registered office at 6th Floor, 99 Gresham Street, London, EC2V 7NG.