The second Self Assessment payment on account for the 2025-26 tax year is due by 31 July 2026. Self-employed workers, landlords, higher-rate taxpayers with untaxed income, and others who file a Self Assessment tax return need to be aware of this deadline. Missing it triggers automatic interest from HMRC at the current rate of 7.25% per annum on the overdue amount.
Payments on account are advance payments toward the following year's tax bill. HMRC requires two equal payments per year from taxpayers whose Self Assessment tax bill was over £1,000 in the previous year and who do not pay more than 80% of their tax through PAYE.
How payments on account are calculated
HMRC bases each payment on account on 50% of the previous year's Self Assessment tax and Class 4 National Insurance liability. For example, a sole trader whose 2024-25 tax return showed a total liability of £8,000 would pay two payments of £4,000 each - the first on 31 January 2026 and the second on 31 July 2026.
Payments on account do not include capital gains tax or student loan repayments, which are collected separately on the 31 January settlement date.
How to reduce payments on account
If income for the current year (2025-26) is expected to be lower than 2024-25 - for example due to reduced business activity, a period of employment rather than self-employment, or a one-off income item that does not recur - taxpayers can apply to reduce their payments on account to reflect the lower expected liability.
The application is made through HMRC's online Self Assessment account or by completing form SA303. HMRC will reduce the payment accordingly. If the reduction turns out to be too large and the actual liability is higher than estimated, HMRC will charge interest on the shortfall. Reducing payments on account is therefore a cash-flow tool, not a tax-saving one.
What happens if the July 2026 payment is missed
Interest accrues from 1 August 2026 on any unpaid amount at HMRC's late payment interest rate, currently 7.25% per annum. There is no separate late payment penalty for the July payment on account itself, but unpaid amounts carry forward and become part of the balancing payment due on 31 January 2027, where further penalties can apply.
HMRC Self Assessment guidance and payment options are available at gov.uk/self-assessment-tax-returns.
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This article is for informational purposes only. All facts sourced from publicly available reports at time of publication, 31 May 2026.
Sources: HMRC Self Assessment guidance at gov.uk; HMRC late payment interest rates at gov.uk/government/publications/rates-and-allowances-hmrc-interest-rates-for-late-and-early-payments.
