Jasmine Birtles
Your money-making expert. Financial journalist, TV and radio personality.
Payments on Account Reminder!
Moneymagpie Team
12th Jun 2025
Payments on Account for freelance workers and self-employed people is something commonly forgotten until it’s too late. This is your six-week reminder that your July Payments on Account are due soon!
What Are Payments on Account?
When you’ve earned enough in a tax year as a self employed worker that means your tax bill is over £1000, you’ll need to pay Payments on Account. This is when you pay your current tax bill plus 50% of that amount in January, with the further 50% due on 31st July.
The aim of PoA is to help freelancers stay ahead of their tax bill. In theory, by the July payment, they should have paid their taxes for the following tax return period. This should make January’s payment easier, as after that first hard year with a 150% January bill, you should (in theory) be paying only half of your next tax bill in advance rather than a full year’s tax in one go.
Check out our full guide here.
But I Didn’t Earn As Much As Last Year
You can apply to reduce your PoA. If you do this at the time of submitting your Self Assessment in January, but then end up earning the same amount or more, you need to pay the outstanding tax PLUS interest on the difference. That’s why it’s really important to only appeal to lower or cancel your PoA if you know you won’t earn as much in the next tax year. For example, if you have taken a long break from work or are winding up your business, you’ll know your income won’t be as much.
If you don’t submit your Self Assessment until January, you will also have a clearer picture of what you’ve earned in the current tax year. If it is significantly lower than the previous year, and you’re unlikely to make up the difference between Jan-April, you can apply to lower or cancel PoA. Just remember that if you earn more and have declared you won’t, you will pay interest on the difference.
It is often better to keep the PoA amount the same and apply for a tax refund, if you’re unsure about whether you will earn the same or more than the previous tax year. If you do get a refund, it’s a good idea to put that cash into a tax savings account to cover your next PoA, if you can.
I Earned More Than Last Year – Does My July Payment Increase?
If you had a great year for 2024/25, and have earned more than your 2023/24 year, you don’t have to pay more than your already-established July PoA. You will pay the difference in January, though – so if you want to budget your taxes you can pay the difference at any time. You won’t be charged interest on the difference if you had not applied to reduce your PoA.
How Much Will Payments on Account Cost?
Your July PoA will be 50% of your last tax bill (not counting the 50% you paid in January). For example, if your last Self Assessment revealed you needed to pay £2000 in tax, you will have paid £3000 total. That is the £2000 tax, plus £1000 which is 50% for your first PoA. Your July payment will be the second 50% – so another £1000.
I Can’t Afford My July Payment on Account
If your July PoA is due but you haven’t been able to save enough money to pay it, don’t delay acting right now. Get in touch with HMRC and speak to them about arranging a payment plan – this could even be arranged interest-free in some cases, and is often set over 12 months.
Do NOT ignore the payment, or only pay some of it without speaking to HMRC. This will incur fines and daily interest charges, only increasing your tax bill and causing more debt.
There are still six weeks (from time of writing) to find extra cash to pay your tax bill. Check out our Make Money section for lots of ideas, from selling your clutter to earning cash with surveys.
How to Pay Your Payment on Account
You can pay HMRC in several ways.
- Opt for a Direct Debit so you don’t miss the payment deadline
- Pay online through your Self Assessment account
- By cheque (allow plenty of time for processing)
- By direct online payment through BACS
If you want to pay through your online banking app or BACS, you can use one of two HMRC bank account details. Make sure you have your Unique Taxpayer Reference, followed by the letter K, as your payment reference. Choose one of these bank accounts:
- Sort code – 08 32 10
- Account number – 12001039
- Account name – HMRC Cumbernauld
- Sort code – 08 32 10
- Account number – 12001020
- Account name – HMRC Shipley
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