31 July Deadline: Don't Forget Your Second Payment on Account

If you completed a Self Assessment tax return last January, there's a good chance HMRC is expecting a payment from you by 31 July 2026. This is your second "payment on account" — an advance instalment towards your current year's tax bill. It's easy to forget about, but interest starts accruing the day after the deadline if it's missed.

What is a payment on account?

Rather than collecting all your tax in one go each January, HMRC spreads the cost across two advance payments during the year. Each payment is based on your previous year's Self Assessment bill and is set at exactly half that amount.

• First payment on account — due 31 January, paid alongside your tax return
• Second payment on account — due 31 July

Any remaining balance — if your actual tax for the year turns out to be higher than your payments covered — is then collected the following January as a "balancing payment".

Who has to make these payments?

You're required to make payments on account if your Self Assessment tax bill for the previous year was more than £1,000, and less than 80% of that bill was already collected through PAYE (i.e. deducted from a salary before you received it).

This affects the self-employed, freelancers, and landlords — and also director-shareholders who take significant dividend income that isn't taxed at source.

What if your income has fallen this year?

Your July payment is calculated on last year's income — but if you expect your income for 2025/26 to be noticeably lower, you can apply to reduce your payments on account. This is done through a claim on your HMRC online account (or by asking your accountant to submit one on your behalf).

It's worth doing if your income has genuinely dropped — there's no reason to hand HMRC money early that you won't ultimately owe. However, be cautious: if you reduce your payments and then earn more than expected, HMRC will charge interest on the shortfall. Get the estimate right before applying.

What happens if you miss the 31 July deadline?

Unlike the January filing deadline, there is no automatic late-filing penalty for the July payment. However, HMRC charges interest from 1 August on any unpaid amount, calculated daily. The longer the balance sits unpaid, the more it costs — so even a short delay adds unnecessary expense.

If you're struggling to pay, HMRC's Time to Pay arrangement lets you spread the debt over instalments. It's better to contact HMRC before the deadline than to simply miss it and say nothing.

What should you do before 31 July?

• Log into your HMRC online account and confirm the amount due
• Pay by debit card, bank transfer, or direct debit — HMRC no longer accepts personal cheques for Self Assessment payments
• If your income has fallen, ask your accountant about reducing your payment on account before the deadline
• If you can't pay in full, contact HMRC now to set up a Time to Pay arrangement

At Capital Force One, we keep on top of these deadlines for our clients and can advise on whether a reduction in your payments on account makes sense for your situation. Get in touch before 31 July if you're unsure what you owe or what to do.