How do Self Assessment Payments on Account work?

1st Payment on Account

The first payment on account is due by 31st January annually. It starts to pay tax on income in the tax year it is paid Eg Payments on Account due by 31st Jan 2024 are paying tax for the 2023-24 tax year.

2nd Payment on Account

The second payment on account is due by 31st July annually. It pays tax on income that arose in the tax year that finished the previous April. Eg Payments on Account due by 31st July 2024 are paying tax for the 2023-24 tax year.

Balancing Payment

Payments on Account are calculated on the basis of the previous year’s declared income. They are therefore an estimate of the tax that is due before the income is declared. Once income is declared, the tax payer will know how much tax has been over or under paid. A balancing payment will then be needed either from the tax payer to HMRC or visa versa. This balancing payment is due 31st Jan.

Summary

Due 31st Jan: First payment on account for the current tax year + balancing payment for the previous tax year.

Due 31st July: Second payment on account for the previous tax year.