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Payments on Account

Payments on account are advance payments towards your tax bill each year.

When do you not have to make payments on account?

  • When your tax bill is less than £1,000
  • When 80% or more is paid through PAYE

When are the payments on account due?

These payments are made twice a year, on 31 January and 31 July.
This means that on 31 January you will need to pay your first payment on account for the next tax year and your balancing payment for the previous tax year. (Almost a 150% tax bill – so start saving!)

How much are the payments on account?

The payments are normally 50% of your previous tax bill and if you are self-employed, it includes Class 4 NI but excludes student loan repayments and capital gains tax.

HMRC is basically using your previous year’s tax bill to estimate your future taxable income. If you are looking for some more reading take a look at what HMRC have to say on the matter here.

A friendly reminder that from 6 April 2024 MTD for ITSA will apply – read more about what this means here.

How to pay payment on account

When paying your payment on account bill you will need to use your unique taxpayer reference (UTR) followed by the letter “K” as your payment reference.

Your first payment on account is due by 31 January along with your balancing tax payment for your previous year.

Your second payment on account is due by 31 July.

Here are a few methods below on how you can pay your payment on account:

  • Online using a debit card or corporate credit card (HMRC charge a non-refundable fee for using a corporate debit card)
  • Bank transfer
  • Direct debit
  • HMRC list a few more accepted payment methods here. From April 2024 HMRC expect all taxpayers to keep digital records and submit returns through accepted and appropriate software. To understand how this changes your bookkeeping process read my blog on How Will Making Tax Digital (MTD) for Income Tax Affect You?


As always just a reminder that I am an accountant but I am not your accountant, this blog is for information purposes and should not be taken as advice.