Making a payment on account for Self Assessment
Some workers, such as sole traders, need to submit a Self Assessment tax return each year. HMRC use this information to calculate how much tax is due. If your Self Assessment tax bill is greater than £1000, then HMRC will require you to make payments on account.
They basically assume you will earn a similar amount the following year, and ask you to pay part of next year’s tax bill in advance. The first payment on account is due by 31st January; the same deadline as the previous year’s tax bill. The second instalment must be paid by 31st July.
The amount which is due on account is calculated by dividing the amount of last year’s tax bill in half.
Watch our video for more information on this, including an example of how to calculate your payment on account.