The short answer
For a 2025/26 Self Assessment liability that creates payments on account, the two instalments are advance payments towards the 2026/27 bill, including Class 4 National Insurance where applicable. Each is usually half the relevant 2025/26 tax. They are due by midnight on 31 January 2027 and 31 July 2027.
Who normally pays
HMRC says payments are not required where the previous relevant tax was less than £1,000, or more than 80% of it was collected outside Self Assessment, such as PAYE.
The Self Assessment statement shows whether instalments are due. Capital Gains Tax and student loan amounts are not simply included in the payment-on-account base in the same way as relevant Income Tax and Class 4 amounts.
Calculation
If the relevant prior bill was £4,000, each normal payment on account is £2,000:
- £2,000 on 31 January;
- £2,000 on 31 July.
When the actual return is completed, these £4,000 advance payments are set against the actual liability. If actual liability is £4,600, a £600 balancing payment remains. The first payment on account for the following year may also be due on that same 31 January.
Why the first year can feel large
A first substantial Self Assessment bill can require both the full liability for the completed year and the first half-payment towards the next year. This is not tax charged twice: the charges relate to different periods.
Use the statement to separate balancing payment, first payment on account and any interest.
Reducing payments
Where the 2026/27 liability is genuinely expected to be lower, a taxpayer can ask HMRC to reduce the payments on account. If they are reduced too far, HMRC charges interest on the shortfall.
Prepare a whole-year forecast. If reduced too far, interest applies to the shortfall. Do not reduce solely because cash is tight; use HMRC’s payment-support route for affordability problems.
Records and checks
Keep the previous calculation, current forecast, reduction request, payment confirmations and live statements. Review the forecast if profit, rent, gains or tax deducted at source changes.
Build a reliable forecast
Start with income and allowable deductions expected for the whole current tax year, not only the months completed. Estimate tax deducted at source and identify amounts that do not form part of the normal payment-on-account base. Compare the resulting relevant liability with the instalments already charged.
Document the assumptions behind any reduction request: expected turnover, profit margin, property result, pension contributions and tax already deducted can all affect the forecast. Revisit it before the second instalment and again when the return is prepared. If the forecast increases, paying the shortfall earlier can limit interest, but the live HMRC account should be checked for the amount and correct reference.
A payment confirmation is not the final reconciliation. Confirm that HMRC allocated the payment to the intended Self Assessment account and charge. If a transfer is missing or sits as unallocated credit, keep the bank evidence and contact HMRC rather than counting it twice in the return calculation.
Common mistakes
- Treating an instalment as a second tax bill for the same year.
- Missing the 31 July charge.
- Assuming every return creates payments on account.
- Reducing without a supportable forecast.
- Ignoring the next first instalment in January.
- Confusing the calculation with the statement.
What to do next
- Open the live statement.
- Identify each charge and year.
- Check the previous-year calculation base.
- Pay by 31 January and 31 July.
- Forecast and reduce only if justified.
- Reconcile against the final return.