Second Payment on Account Due 31 July 2026: What It Is and How to Pay
- A payment on account is an advance payment towards next year's UK Self Assessment tax bill, paid in two instalments (31 January and 31 July).
- The second payment for 2025/26 is due 31 July 2026 — each instalment is 50% of last year's tax bill.
- You pay it if your last bill was over £1,000 and less than 80% was collected at source — mainly the self-employed, landlords, and directors.
- Pay via HMRC online, the app, or bank transfer using your UTR followed by the letter K.
- Miss it and HMRC charges daily interest from 1 August (base rate + 4%).
- If your income dropped, you can apply to reduce it (form SA303) — or file your return early so you only pay what you actually owe.
Every January, the Self Assessment deadline gets wall-to-wall coverage. The July deadline? Barely a whisper. Yet every summer, thousands of sole traders, freelancers and landlords open their HMRC account and find a bill they forgot was coming. If that's you right now — deep breath. This guide covers everything in plain English.
What is a payment on account?
A payment on account is an advance payment towards next year's tax bill. HMRC doesn't like waiting until January for all of its money, so once you're inside the system, it splits your expected bill into two instalments:
Each instalment is 50% of your previous year's tax bill (Income Tax + Class 4 National Insurance). The payment due this month is half of your 2024/25 bill, paid in advance towards your 2025/26 bill.
A worked example
Say your 2024/25 Self Assessment bill was £4,000. HMRC assumes you'll owe roughly the same again, so it asks for:
- £2,000 by 31 January 2026 (first payment on account)
- £2,000 by 31 July 2026 (second payment on account)
When you file your 2025/26 return, HMRC does the maths. Actual bill came to £5,000? You pay the £1,000 difference by 31 January 2027. Only owed £3,500? HMRC refunds the £500. Payments on account never change how much tax you pay — only when.
Who has to make payments on account?
You're in the payments-on-account system if both of these applied to your last bill:
- Your Self Assessment bill was more than £1,000, and
- Less than 80% of your tax was collected at source (e.g. through PAYE)
That's why this mainly hits the self-employed, landlords, contractors and directors with dividend income — people whose money arrives before tax is taken off. If you're mostly PAYE and Self Assessment is just a top-up, you're usually exempt.
Why is my second payment on account £0?
One of the most-Googled tax questions every July. A zero usually means one of four things:
- Your previous bill was under £1,000, so payments on account were never triggered
- 80% or more of your tax was already collected at source
- You (or your accountant) applied to reduce your payments on account to nil
- You've already paid it — check your payment history before panicking
⚠️ Caution: £0 in July doesn't always mean nothing to pay overall. Your full 2025/26 bill may simply land as one lump next January — worth knowing now so you can budget for it.
How to check exactly what you owe
- Sign in to your HMRC online account or the HMRC app
- Open your Self Assessment statement
- Look for "second payment on account for 2025/26" due 31 July 2026
How to pay (and how long each method takes)
HMRC needs the money to clear by 31 July — so match your payment method to the days you have left:
| Payment method | Time to reach HMRC |
|---|---|
| Online or telephone banking (Faster Payments) | Same or next day |
| Debit card online | Same or next day |
| HMRC app | Same or next day |
| Bacs | About 3 working days |
| Direct Debit (already set up) | About 3 working days |
| Direct Debit (first time) | About 5 working days |
💡 Crucial detail: use your 11-character payment reference — your 10-digit Unique Taxpayer Reference (UTR) followed by the letter K. A wrong reference is the #1 reason payments go missing and "late" letters arrive even though you paid.
What happens if you pay late?
There's no instant penalty for a late payment on account — but HMRC charges daily interest from 1 August 2026, currently set at the Bank of England base rate plus 4 percentage points. That's credit-card territory. HMRC is not a cheap overdraft.
Genuinely can't pay? Don't go silent. HMRC's Time to Pay arrangement lets you spread the bill over monthly instalments — interest still runs, but you avoid collection action. It's far easier to arrange before the deadline than after.
Can you reduce your July payment? (Yes — here's how)
Payments on account assume this year matches last year. If your 2025/26 income was lower — lost a client, took time off, business dipped — you can apply to reduce your payments on account:
- Online through your HMRC account, or
- By post using form SA303, or
- Through your accountant in minutes
⚠️ The trap: reduce them below what your final bill turns out to be, and HMRC backdates interest on the shortfall — as if you'd never reduced them. Guessing low to help cash flow is a false economy.
The smartest move? File your 2025/26 return early. The tax year ended on 5 April 2026, so you can file today. If your real bill is lower than HMRC's estimate, your July payment drops automatically — you pay what you actually owe, not what HMRC guessed.
Frequently asked questions
When is the second payment on account due?
31 July 2026, for the 2025/26 tax year. The next one (first payment on account for 2026/27) is due 31 January 2027.
Is a payment on account extra tax?
No. It's a prepayment of tax you'd owe anyway — it changes when you pay, never how much.
What if my income went up this year?
Your July payment stays based on last year's bill. The extra lands as a balancing payment on 31 January 2027 — alongside your next first payment on account. That January "double hit" is what catches growing businesses out, so start setting money aside now.
Do limited companies make payments on account?
Not for Corporation Tax at typical small-company profit levels. Payments on account are a Self Assessment mechanism — sole traders, landlords, partners and individuals with untaxed income.
Can I pay in instalments instead?
Yes — HMRC's Budget Payment Plan lets you pay weekly or monthly in advance, and Time to Pay spreads a bill you already owe. Both beat ignoring the deadline.
FincSol Accountancy handles Self Assessment end-to-end for sole traders, freelancers, landlords and e-commerce sellers. We file early so your July payment reflects your actual income — not HMRC's guess. Dedicated personal accountant. No long-term contract.
Message us on WhatsApp →Related: for every HMRC payment method, clearing times, bank details and Time to Pay, see our full guide on how to pay your Self Assessment tax bill.