31 July 2026 – Second Self Assessment Payment on Account
For many UK taxpayers, particularly the self-employed, freelancers, landlords, and those with additional untaxed income, 31 July 2026 is a key date in the financial calendar. It marks the deadline for making the second payment on account towards the 2025/26 tax year under the Self Assessment system. Understanding what this payment is, why it exists, and how it affects your finances is essential for staying compliant and avoiding unnecessary charges.
What is a Payment on Account?
A payment on account is an advance contribution towards your next tax bill. Rather than paying your entire liability in one lump sum after submitting your tax return, HMRC requires many taxpayers to make two instalments during the year.
Each instalment is usually 50% of your previous year’s tax bill, excluding elements such as Capital Gains Tax and student loan repayments. This means your payments are based on an estimate rather than your actual earnings for the current year.
The system is designed to spread the cost of tax over time, making it more manageable—especially for those whose income is not taxed at source through PAYE.
Key Dates to Remember
The Self Assessment payment structure includes two main payments on account:
31 January 2026 – First payment on account (alongside any balancing payment for the previous tax year)
31 July 2026 – Second payment on account
The July payment completes your advance contributions towards the 2025/26 tax year. Even though the tax return for this period won’t be submitted until 31 January 2027, HMRC expects this estimated tax to be partially settled in advance.
Who Needs to Make This Payment?
You will generally 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 at source, such as through PAYE
This commonly applies to:
Self-employed individuals and sole traders
Freelancers and contractors
Landlords with rental income
Individuals with significant investment or dividend income
If most of your income is taxed automatically through PAYE, you may not need to make payments on account.
How Payments on Account Work
To illustrate how the system works, consider the following example:
If your 2024/25 tax bill was £4,000, HMRC will assume a similar liability for 2025/26. You would then be required to pay:
£2,000 on 31 January 2026
£2,000 on 31 July 2026
These payments total £4,000 and go towards your next tax bill.
Once you submit your 2025/26 tax return, HMRC will calculate your actual liability:
If your bill is higher than £4,000, you will need to pay the difference (a balancing payment) by 31 January 2027
If your bill is lower, you may receive a refund or have the excess credited to future payments
What Happens If You Miss the Deadline?
Failing to make your second payment on account by 31 July 2026 can lead to:
Interest charges accruing from the due date until payment is made
Potential penalties if the delay continues
Increased financial pressure as unpaid amounts roll into your next tax bill
Unlike some other tax deadlines, there is no automatic grace period—interest begins to accrue immediately, even if penalties take longer to apply.
Managing Cash Flow and Planning Ahead
One of the biggest challenges with payments on account is cash flow management. Because payments are based on a previous year’s earnings, they may not reflect your current financial situation.
To stay on top of your obligations:
Set aside money regularly throughout the year
Keep accurate and up-to-date financial records
Review your tax estimates periodically
Use budgeting tools or accounting software to forecast liabilities
Planning ahead can help prevent the July payment from becoming an unexpected burden.
Can You Reduce Your Payment on Account?
If you expect your income for the 2025/26 tax year to be lower than the previous year, you can apply to reduce your payments on account.
This can be done through your HMRC online account or via your tax return. However, it’s important to be cautious:
If you reduce your payments too much, you may face interest charges on the shortfall
HMRC may scrutinise reductions if they appear unreasonable
A careful estimate or professional advice can help ensure you reduce payments safely and accurately.
Common Pitfalls to Avoid
Many taxpayers, particularly those new to Self Assessment, are caught out by:
Not realising they need to make a second payment in July
Forgetting that payments are based on estimates, not actual income
Failing to budget for two large payments each year
Confusing payments on account with the final tax bill
Being aware of these common issues can help you stay ahead and avoid unnecessary stress.
Final Thoughts
The 31 July 2026 second payment on account is a crucial part of the UK Self Assessment system. While it can feel counterintuitive to pay tax in advance, the system is designed to spread the financial load and reduce the likelihood of large, one-off payments.
By understanding how payments on account work, keeping track of deadlines, and planning your finances carefully, you can manage your tax obligations with confidence and avoid unexpected surprises.
If you’re unsure about your situation, checking your HMRC account early or consulting a qualified accountant can provide clarity and peace of mind.
As a family-run company, we pride ourselves on providing a bespoke service tailored to your particular needs.
Above all, our objective is to save you time, money and effort in managing your accounts, leaving you free to focus on building your business.
Remember, you’re not alone, we’re always here to help if you have an accounts problem or query
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