What is a payment on account?

Payments on account are advance payments of your next year’s income tax bill, collected by HMRC through self-assessment. Each payment is half of your previous year’s tax liability, paid in January and July. If your circumstances change and your actual liability will be lower than expected, you can apply to reduce your payments on account. If you do not reduce them and your actual tax is lower, the excess is refunded or carried forward. We manage payments on account as part of our self-assessment service.