Why am I paying next year's tax already?

Employees pay as they earn through PAYE; payments on account are the self-employed version, collected in two advances. It stings once, the first year, when the balance and the first advance land together.

Can I reduce the payments if income drops?

Yes, through your tax return or online account. But if you reduce below what the real bill turns out to be, HMRC charges interest on the difference, so estimate honestly.

Do payments on account cover everything?

They cover income tax and Class 4 NI. Capital gains and student loan repayments fall outside and are settled with the January balance.

United Kingdom

Payments on account planner

The year you first owe more than 1,000, January costs one and a half times your bill: the balance plus a 50% advance for next year, with another 50% in July. Seeing it coming is the whole game.

Your bill

This year's Self Assessment bill

Income tax plus Class 4 NI for the year.

Already paid on account

Last year's two advances against this bill, if any.

What is due

Due 31 January£12,000

Balance + first advance: £8,000 + £4,000
Due 31 July: £4,000

Estimate

workingfigures.com/uk/payments-on-account

Formula

January = (bill − already paid on account) + bill ÷ 2; July = bill ÷ 2. Advances apply when the bill is 1,000+ and less than 80% was collected at source.

Assumptions

The advance is based on this year's bill (HMRC assumes next year matches). If you know next year will be lower you can apply to reduce payments on account, but reduce too far and interest applies on the shortfall.

Rules verified 2026-08-21

FAQ

Why am I paying next year's tax already?: Employees pay as they earn through PAYE; payments on account are the self-employed version, collected in two advances. It stings once, the first year, when the balance and the first advance land together.
Can I reduce the payments if income drops?: Yes, through your tax return or online account. But if you reduce below what the real bill turns out to be, HMRC charges interest on the difference, so estimate honestly.
Do payments on account cover everything?: They cover income tax and Class 4 NI. Capital gains and student loan repayments fall outside and are settled with the January balance.