What Are Payments on Account and Why Is Your Tax Bill Higher Than Expected?

If you are new to Self Assessment, your first tax bill may be higher than expected because you may need to pay your tax bill plus the first payment on account for the next tax year.

Payments on account are advance payments towards your next Self Assessment tax bill. Each payment is normally 50% of your previous year’s tax liability, with payments due on 31 January and 31 July.

For example, if your tax bill is £4,000, you may need to pay £4,000 plus a £2,000 payment on account by 31 January. A further £2,000 payment would normally be due by 31 July.

This means your first Self Assessment payment can look much higher than your actual annual tax bill. The payments on account are not an extra tax — they are advance payments towards your next bill.