Payments on account are advances towards the next Self Assessment bill, including Class 4 National Insurance where applicable. They are not a second tax on the same profit.
When are they required?
HMRC normally requires them unless the previous year’s tax was less than £1,000 or more than 80% of the tax was paid outside Self Assessment. Each instalment is normally half the relevant previous-year amount, due on 31 January and 31 July. Check the statement rather than estimating from turnover.
A first-year illustration
Assume the relevant 2025/26 bill is £2,400, there were no earlier payments on account and neither exception applies. On 31 January 2027 the driver pays £2,400 for 2025/26 plus £1,200 towards 2026/27: £3,600 altogether. A further £1,200 is due on 31 July 2027. The next annual calculation then reconciles the advances with the actual liability.
This illustration excludes other adjustments and charges. It explains cash timing, not the Income Tax calculation itself. Read how much tax drivers pay for a separate profit-based example.
If profit falls
You can ask HMRC to reduce payments on account when the expected liability is lower. Keep a supported forecast. Reducing too far can lead to interest on the shortfall; spending the money elsewhere is not a basis for reducing the tax estimate.
Use tax return support to review the calculation and payment schedule. If cash flow is the problem, discuss payment options with HMRC promptly rather than silently missing the deadline.
Sources checked 8 October 2026: Payments On Account.
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