What is a payment on account for self-assessment?
Answered 11 March 2026
Here is a comprehensive explanation of payments on account for Self Assessment:
What the law says
Under s.59A Taxes Management Act 1970 (TMA 1970), payments on account are advance payments of income tax made during the tax year, calculated by reference to the previous year's liability.
Who must make them: Payments on account are required from any taxpayer who self-assesses to income tax under s.9 TMA 1970 for the preceding tax year. They are not required if the taxpayer did not file a tax return for the preceding year.
How they are calculated: They are calculated by reference to a "relevant amount" — the amount by which the total income tax in a person's self assessment (after allowances and reliefs) exceeds the amount of income tax deducted at source. Each payment on account is 50% of this relevant amount.
The 80% exemption: Taxpayers do not have to make payments on account if 80% or more of their total income tax assessed for the previous year was collected via deduction at source (e.g. PAYE).
When they are due:
- First payment on account: 31 January within the tax year
- Second payment on account: 31 July after the tax year
- Balancing payment (any remaining tax owed): 31 January after the tax year
Claims to reduce or cancel: Under ss.59A(3) and (4) TMA 1970, a taxpayer may claim to reduce or cancel their payments on account (up to 31 January following the end of the tax year) if they believe their actual liability will be lower than the amount calculated under the standard rules, or that there will be no liability at all.
HMRC guidance / practice
In practice, HMRC calculates payments on account automatically for the taxpayer.
What "tax deducted at source" includes for the purposes of the s.59A calculation:
- Income tax deducted (or treated as deducted) from any income
- PAYE tax deducted at source (including tax to be deducted under PAYE in a subsequent year)
- Tax credits on dividends
Worked example: If a taxpayer has a Self Assessment liability of £10,000,000 in 2019/20, two payments on account of £5,000,000 each are due (31 January and 31 July 2021). If the actual 2020/21 liability turns out to be £11,000,000, a balancing payment of £1,000,000 is due by 31 January 2022, alongside the first payment on account for the following year.
Reducing payments on account: If a taxpayer makes a valid claim to reduce payments on account (e.g. expecting a lower liability of £8,000,000 instead of £10,000,000), each payment on account is reduced accordingly. However, if the actual liability exceeds the reduced amount claimed, interest and surcharges will be due from each payment on account due date on the additional tax.
Penalties: A penalty can be charged where a taxpayer fraudulently or negligently makes an incorrect statement in connection with a claim to reduce payments on account (s.59A(6) TMA 1970).
Further detailed guidance is available in HMRC's Self Assessment Legal Framework Manual (SALF) from SALF300 onwards.
Citation sources
Under Section 59A TMA 1970 payments on account are calculated by reference to a ‘relevant amount’ of the income tax assessed for the previous year. The relevant amount is the amount by which the total income tax contained in a person’s self assessment, after allowances and reliefs, exceeds the amount of tax deducted at source. Taxpayers do not have to make payments on account if 80 per cent or more of their total income tax assessed for the previous year was tax deducted at source. For the 80
Entity B has a Self-Assessment liability in 2019/20 of £10,000,000. On 31 January 2021 payment of £10,000,000 is due. Entity B makes a valid claim to reduce Payments on Account as the expected liability is expected to be £8,000,000. On 31 January 2021 £4,000,000 Payment on Account is due. On 31 July 2021 the second Payment on Account of £4,000,000 is due. Entity B submits its 20/21 Self-Assessment which shows a liability for the year of £8,000,000. At 31 January 2022 they is no balancing charge
Entity A has a Self-Assessment liability in 2019/20 of £10,000,000. On 31 January 2021 payment of £10,000,000 is due. In addition, on 31 January 2021 £5,000,000 Payment on Account is due. On 31 July 2021 the second Payment on Account of £5,000,000 is due. Entity A submits its 20/21 Self Assessment which shows a liability for the year of £11,000,000. By 31 January 2022 they must pay a balancing charge of £1,000,000 as well as the first Payment on Account for 21/22.
The Statutory due dates for payment of SA liability are Liability/charge Statutory due date First payment on account (see Note 1) 31 January before the end of the year of self assessment Second payment on account (see Note 1) 31 July after the year of self assessment Balancing payment (see Notes 1 and 2) 31 January after the year of self assessment Interest Date the interest charge is created Penalties 30 days after the date of the notice of penalty Surcharge 30 days after the date of the notice
Payments on account under TMA70/S59A for any tax year are due on 31 January of that tax year and 31 July next following that tax year, subject to de minimis limits and are calculated by reference to the tax liability for the preceding year. Where a taxpayer’s circumstances change significantly from one year to the next, they can make a claim to reduce or cancel the payments on account. The revised payments should reflect the taxpayer’s views on what payment on account, if any, are due for the cu
Sections 59A (3) and (4) TMA 1970 allows for a claim to reduce payments on account to be made up to 31 January following the end of the tax year. For the claim to be valid the taxpayer must state the grounds for their belief that either The expected liability under SA, after deducting tax paid at source, will be less than that determined by using the rules for calculating payments on account (SAM1100) Or There will be no SA liability or that any such liability will be covered by tax deducted at
Section 59A(1) Payments on account are normally required from any taxpayer who self asseses to income tax under section 9 of TMA 1970, in any amount, for the preceding tax year. Section 9 TMA is the legislation that requires a taxpayer who files a tax return to make a self assessment of their income tax liability for a tax year. Therefore, payments on account of a person's tax liability for a tax year are only required if they filed a tax return for the preceding year. They will not be required
calculated automatically for the taxpayer. HMRC send statements of account of the taxpayer's Self Assessment account showing charges and payments received. Taxpayers can get help with completing their tax return through the internet service, HMRC online or the Helpline on 0300 200 3310. All business profits and investment income are taxed on a current year basis, and partnership profits are taxed on the individual partners rather than on the partnership itself. ITSA includes capital gains and lo
Section 59A(8) When computing the 'relevant amount' under section 59A(1), or when claiming to reduce or cancel payments on account, the tax deducted at source will include: any income tax deducted (or treated as deducted) from any income, or tax treated as paid on any income any PAYE tax deducted at source in respect of that year (ITEPA03/S684) including any tax that will be deducted under PAYE in a subsequent year any credit on dividends etc (ITTOIA05/S397 and 397A). Any amounts deducted at sou