If you're self-employed or complete a self-assessment tax return, 31st July is an important date to have in your diary. While the 31st January deadline is widely recognised, many taxpayers are less familiar with the second payment on account, which is due at the end of July.
Missing this payment could result in interest being charged by HMRC, so it's worth understanding what it is, whether it applies to you, and what your options are if you're concerned about paying on time.
What Is a Payment on Account?
Payment on account is an advance payment towards your next self-assessment tax bill. Rather than paying all of your tax in one go after the tax year has ended, HMRC asks many taxpayers to make two instalments during the year.
The payments are due:
• 31st January - First Payment on Account and any balancing payment for the previous tax year.
• 31st July - Second Payment on Account.
Each payment is usually 50% of your previous year's tax bill, excluding Capital Gains Tax and most student loan repayments.
The aim is to spread your tax payments across the year rather than leaving everything until the following January.
Who Needs to Make the 31st July Payment?
The second Payment on Account generally affects individuals who:
• Are self-employed.
• Are members of a business partnership.
• Receive untaxed income, such as rental income from buy-to-let properties.
• Have a self-assessment tax bill where Payments on Account apply.
Typically, you'll need to make payments on account if your last self-assessment tax bill was more than £1,000, and less than 80% of your tax was collected through PAYE.
If you're unsure whether this applies to you, it's always worth checking before the deadline.
How Can You Check What You Owe?
The easiest way to see what is due is by logging into your HMRC online account, where your latest self-assessment statement will show:
• Your Payment on Account amount.
• Any outstanding balances.
• Payment deadlines.
• Previous payments received.
If you use an accountant, they will also be able to confirm exactly what is due and when it needs to be paid.
Checking early gives you plenty of time to budget and avoid any last-minute surprises.
What If Your Income Has Fallen?
Payments on Account are based on your previous year's tax bill, not your current year's earnings.
If your income has reduced significantly since then, you may be paying more than you are likely to owe.
In some circumstances, you can apply to reduce your payments on account.
However, this should only be done if you have a genuine reason to believe your tax bill will be lower. Reducing payments too much could result in interest being charged if the estimate proves to be incorrect.
Seeking professional advice before making a claim can help ensure you make the right decision.
What Happens If You Can't Pay by 31st July?
If you're worried about paying your tax bill, don't ignore it.
HMRC may be able to help through its time to pay arrangement, allowing you to spread your payments over an agreed period rather than paying everything at once.
If you're experiencing financial difficulties:
• File any outstanding tax returns.
• Check exactly what you owe.
• Contact HMRC as soon as possible or discuss your options with your accountant.
• Avoid waiting until after the deadline has passed.
Taking action early is always better than leaving the situation unresolved.
Tips to Stay Ahead of Future Tax Payments
Managing your tax throughout the year can make future deadlines much less stressful.
Some simple ways to stay organised include:
• Setting aside money regularly for tax.
• Keeping accurate income and expense records.
• Reviewing your tax position throughout the year.
• Speaking to your accountant before major financial decisions.
Small consistent habits can make a big difference when tax deadlines arrive.
We're Here to Help
The 31st July payments on account often catches people by surprise, but it doesn't have to be a source of stress. Understanding what is due, checking your HMRC account early, and seeking advice if your circumstances have changed can help you stay in control of your tax affairs.
If you're unsure whether you need to make a Payment on Account, believe your payments should be reduced, or need support understanding your self-assessment obligations, we're here to help.
At TRS Secretaries, we provide friendly, professional advice tailored to your individual circumstances. Whether you're self-employed, a landlord, or running a small business, we'll help you understand your responsibilities and plan ahead with confidence.
Get in touch with our team today to discuss your tax position and ensure you're fully prepared for the 31st July deadline.
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