If you are newly self-employed or have recently become a landlord, Self Assessment can often feel like one of those tasks you know you should fully understand, but never quite find the time to get to grips with.

When is the tax actually due? Why does January always seem so costly? And what exactly is meant by a “payment on account”?

In this article, we explain how Self Assessment tax payments work in practice, highlight the key deadlines to be aware of, and show how forward planning can help you avoid unwelcome surprises.

Understanding Self Assessment payments

Once your tax return has been completed and submitted, HM Revenue & Customs (HMRC) calculate how much tax you owe on income that has not been taxed through PAYE. Unlike tax deducted automatically from wages, it is your responsibility to make the payment yourself, which makes understanding the deadlines particularly important.

For most taxpayers, there are two main types of payments to make each year.

Payments on account
A payment on account is effectively an advance payment towards your next year’s tax bill. If your tax liability for a year exceeds £1,000, HMRC will usually require two equal payments, due on 31 January and 31 July. You can think of this as putting money aside in advance for your future tax.

Balancing payment
The balancing payment covers any remaining tax due once your return has been finalised and submitted. This payment must be made by 31 January following the end of the relevant tax year.

For example, if your tax bill for 2023/24 was £3,000, you will likely have paid £1,500 on 31 January 2025 and a further £1,500 on 31 July 2025 as payments on account. If your tax bill for 2024/25 then comes to £3,200, you would pay the £200 balancing payment on 31 January 2026. On the same date, you would also make a £1,600 payment on account towards the following year’s tax bill, meaning a total payment of £1,800 on 31 January 2026.

If you are new to Self Assessment, you will usually not have made any payments on account in your first year. As a result, you will need to pay the full tax balance for that year by 31 January following the end of the tax year.

Put simply, if your tax bill for 2024/25 is £3,200, you will need to pay £3,200 on 31 January 2026. In addition, you will also make a £1,600 payment on account towards the next tax year on the same date, resulting in a total payment of £4,800.

It’s easy to see why January can feel particularly expensive.

How to pay

Once you know how, paying your tax is relatively straightforward.

Most people now pay online through their HMRC account, either by bank transfer or debit card. The HMRC app can also be used to make payments via your bank’s app or through online banking.

As long as you use the correct reference numbers, the payment will be allocated correctly.

Avoiding surprises

Missing or late payments can result in penalties and interest, so planning ahead is key. Setting calendar reminders can help ensure deadlines are not overlooked.

Another useful approach is to put money aside each month in a separate account specifically for tax. This can reduce pressure and avoid last-minute scrambles when payments fall due.

If you would like help completing your tax return or need advice on managing your tax payments, please get in touch. We would be very happy to help.

See: https://www.gov.uk/government/news/65-rise-in-self-assessment-payments-via-the-hmrc-app