If you operate as a sole trader, partnership or just owe tax from your self-assessment tax return calculation you normally pay a balancing payment by 31st January each year.
However, it is not usually as simple as this, especially if the amount of tax due, exceeds £1,000. In these circumstances, HMRC will ask you to pay two instalments on account for a future year - one paid in January and the next paid in July. This means that the estimated liability for the tax year is paid three months after the tax year-end.
As an example, for the 5th April 2024 tax year, let's assume the tax bill was £2,000.
| 1 | 31st January 2025 | Tax Liability to pay for April 2024 income: | £2,000 |
| 2 | 31st January 2025 | 1st payment on account for April 2025: | £1,000 |
| 3 | 31st July 2025 | 2nd payment on account for April 2025: | £1,000 |
| 4 | 31st January 2026 | Balancing payment for April 2025 | £X |
| 5 | 31st January 2026 | 1st Payment on account for April 2026 | £HalfX |
| 6 | 31st July 2026 | 2nd payment on account for April 2026: | £HalfX |
HMRC will always estimate the tax for the next year based upon what tax was due for the previous year. Therefore, HMRC will always get tax upfront with a balancing payment made by you, three months after the year-end.
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