Payments on account - when do you need to pay them?
You may have to make payments on account towards the current year's tax.
You usually have to make these payments if the tax due for the previous year was over £1,000. But if more than 80 per cent of this tax has already been collected at source, you won't have to make payments on account.
If you do make payments on account, you will make two payments. Each payment is half of the tax due for the previous year.
You must pay the first instalment by 31 January in the current year and the second by the following 31 July. For example, for the tax year 2011-12 (6 April 2011 to 5 April 2012) the first payment on account is due on 31 January 2012. The second payment on account is due on 31 July 2012.
Example - no payments on account are needed
Mr L's tax bill for the 2010-11 tax year was £1,200.
£1,000 of this tax had already been collected at source on his savings.
As the tax collected at source is more than 80 per cent of the tax bill, Mr L won't have to make payments on account for the 2011-12 tax year.
He must pay any tax due for the 2011-12 tax year by the normal payment deadline of 31 January 2013.
Example - payments on account must be made
Mrs A completes her 2010-11 tax return and works out that she has £4,500 tax to pay for the year ending 5 April 2011. No tax has been collected at source.
She has already made two payments on account towards this amount - £2,000 in January 2011 and £2,000 in July 2011.
She must make a balancing payment of £500 by 31 January 2012.
Her payments on account for the 2011-12 tax year will be £2,250 each.
This is half of the tax that was due for 2010-11 (£4,500/2)
These payments are due on 31 January 2012 and 31 July 2012.
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If you think your payments on account are too high
If you know that your income for the current year will be lower than last year's, you can ask to reduce your payments on account. But:
if you pay less than you need to, HMRC will charge you interest
HMRC may ask you to pay a penalty too if they think you haven't taken reasonable care
You can reduce your payments on account in any of the following ways:
make a claim on the calculation pages of your tax return
sign on to HMRC Online Services and make a claim online
download, complete and send form SA303
If you realise that you've reduced your payments by too much - perhaps because your income turns out to be higher than you thought - please tell HMRC straight away.
You can do this online, download form SA303 or ring HMRC on the phone number on your Self Assessment Statement. If you delay you may have to pay interest and a penalty.
Log in or register for HMRC Online Services
Go to form SA303 Claim to reduce payments on account
Download a leaflet on taking reasonable care (PDF 265K)
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More useful links
How to pay your tax
Deadlines and penalties for payments and tax returns
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Do it online
Register your business online
Sign up for Self Assessment Online
Log in to Self Assessment Online
See an online tax return demo
Commercial software options
Update your contact details
See also
Find a form
Income Tax
Income Tax rates and allowances
Capital Gains Tax rates and allowances
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