Published: July 2026 | Fact-Checked & Audited By: David Vance, CTA FCA (Chartered Tax Advisor & Accountant)
This guide is fully updated for the 2026/27 HMRC tax year and complies with the latest HMRC legislation.
For thousands of self-employed individuals, sole traders, and property landlords in the UK, 31 July 2026 marks one of the most critical tax deadlines of the year. This is the deadline to make your second payment on account for the 2025/26 tax year. Understanding how this tax bill is calculated (easily estimated using our Income Tax Calculator), how to submit payment to HMRC, and—crucially—how to claim an HMRC second payment on account reduction if your earnings fell can save you from severe cash flow strain and late payment interest penalties.
What is an HMRC Payment on Account?
Payments on account are advance payments towards your next Self-Assessment tax bill. HMRC automatically splits your estimated tax liability into two equal payments, designed to help self-employed workers spread their tax bills across the year rather than paying one massive sum in January. Each payment on account is equal to 50% of your previous year’s tax bill, which you can track using our Sole Trader Calculator.
The Payment on Account Thresholds
HMRC will request payments on account unless:
- Your tax bill for the previous tax year was under £1,000.
- You have already paid more than 80% of the tax you owe through other methods, such as PAYE payroll deductions.
How to Reduce Your Second Payment on Account
If your business profits or rental income dropped during the 2025/26 tax year, you are not legally required to pay the full estimated amount. You can request a second payment on account reduction because you believe your actual tax liability will be lower than the previous year. This can be submitted online via your HMRC government gateway account or by filing Form SA303.
⚠️ Warning on Underpayments & Interest: While reducing your payment on account helps cash flow, if you reduce it too much and your final tax bill ends up higher than what you paid, HMRC will charge interest on the difference. The current late payment interest rate stands at a high 7.75%, meaning underestimating your tax liabilities can become costly.
How to Pay HMRC Self-Assessment Payments on Account
You can pay your second payment on account through several secure methods. Ensure you allow sufficient time for clearance to avoid missing the 31 July 2026 deadline:
| Payment Method | Clearance Time | Strategic Recommendation |
|---|---|---|
| App / Approve via Bank (Open Banking) | Instant / Same Day | Recommended – Safest and fastest method. |
| Online/Telephone Bank Transfer (FPS/CHAPS) | Same Day / Next Day | Ensure you use your 10-digit UTR followed by ‘K’ as the reference. |
| Direct Debit (Existing setup) | 3 Working Days | Must be authorized well in advance. |