Because it includes a first payment towards next year: a sole trader whose 2026/27 bill is £7,651.80 pays £11,477.70 on 31 January 2028, then £3,825.90 on 31 July 2028.
A sole trader who started in 2026/27 with £42,000 of profit and has never paid through Self Assessment before
| Income tax for 2026/27 | £5,886.00 |
| Class 4 National Insurance for 2026/27 | £1,765.80 |
| Balancing payment for 2026/27 | £7,651.80 |
| First payment on account for 2027/28 (50% of £7,651.80) | £3,825.90 |
| Due 31 January 2028 | £11,477.70 |
| Second payment on account for 2027/28, due 31 July 2028 | £3,825.90 |
England. No tax was collected at source, and there is no other income. All assumptions and rates
Assumptions and rates
- England. No tax was collected at source, and there is no other income.
- 2026/27 is the first year with a Self Assessment bill, so nothing was paid on account for it.
- No claim is made to reduce the payments on account.
- Income tax 20% on £29,430 of taxable income
- Class 4 National Insurance 6% on £29,430
- Each payment on account is 50% of the previous year's bill; any odd penny goes on the second
What is a payment on account?
An advance towards next year's Self Assessment bill. HMRC assumes next year will look like this one, so it asks for two payments, each half of this year's bill, on 31 January during the year and 31 July after it ends.
In the first year you pay this year's full bill and the first advance on the same day. That is why the first January is so large. From the second year, the advances you have already made count towards the bill, and January settles only the difference.
When don't I have to make them?
When last year's Self Assessment bill was under £1,000, or when more than 80% of your tax was collected at source, for example through PAYE on a salary.
What happens the following January?
Suppose the 2027/28 bill turns out to be £7,651.80 again. The two payments of £3,825.90 already cover it, so 31 January 2029 has no balancing payment. You pay only the first payment on account for 2028/29, which is £3,825.90.
If profit rises, January brings a balancing payment for the difference as well. If it falls, the payments on account may have been too high, and HMRC refunds or offsets the excess.
Does the same happen with dividends?
Yes. A director with a £12,570 salary and £40,000 of dividends in 2026/27 has a bill of £4,821.25. On 31 January 2028 they pay that plus a first payment on account of £2,410.62, which is £7,231.87. The second payment on 31 July 2028 is £2,410.63, because the odd penny goes on the second. How much tax will I pay on £40,000 of dividends? has the full working.
Can I reduce them?
Yes, if you expect next year's bill to be lower, you can apply to HMRC to reduce them. If you reduce them too far, you pay interest on the shortfall, so base the claim on a real estimate.
What is left out of payments on account?
Capital gains tax and student loan repayments are not included. They are paid in full with the balancing payment, so a year with a large gain can make January bigger without changing the payments on account that follow.
What this doesn’t cover
- Class 2 National Insurance, which is voluntary and paid separately.
- Scottish income tax rates.
- Interest and penalties on late payments.
- Spreading a bill through an HMRC payment plan.
Common questions
They are advances towards next year's tax. If they turn out to be more than the bill, the excess is refunded or offset.
They include Class 4 National Insurance along with income tax. Capital gains tax and student loan repayments are left out.
A short email before each deadline that costs money to miss, and when a new guide goes up.