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What are payments on account and why is my first bill 150%?

Answered by Jordan Onraet-Wells, Founder & Chartered Tax Adviser (CTA). Published 17 August 2026. Last reviewed 17 August 2026.

The short answer

Payments on account are advance instalments towards your next Self Assessment bill: two payments, each half of the previous year's tax, due by midnight on 31 January and 31 July. You must make them unless your last bill was under £1,000 or more than 80% of your tax was collected at source, for example through PAYE. The 150% shock hits first-time filers because there is no previous year, so nothing was paid in advance: 31 January 2027 collects the entire 2025/26 liability plus the first 2026/27 payment on account of half that bill again, with the second half following on 31 July 2027. If you expect next year's income to be lower, you can claim to reduce the payments on account.

Each payment on account is half of your previous year's tax bill, due by midnight on 31 January and 31 July, and counts towards the following year's liability.
They apply unless your last Self Assessment bill was under £1,000 or more than 80% of that year's tax was collected at source, for example through PAYE.
First-time filers feel the 150% effect: 31 January 2027 collects the full 2025/26 balance plus a first 2026/27 instalment of half that bill, so a £20,000 liability becomes a £30,000 January payment.
If your income is falling, for example because you have left the UK, you can claim to reduce your payments on account so they match what you actually expect to owe.
Non-resident and FIG filers cannot use HMRC's free online service because it does not support the SA109, so the return itself needs paper by 31 October 2026 or commercial software or an agent by 31 January 2027.

What payments on account are

Payments on account are advance payments towards your next tax bill. Each one is normally half of the tax you owed for the previous year, including Class 4 National Insurance if you were self-employed, and they fall due by midnight on 31 January and 31 July. You only make them if your last bill was £1,000 or more and less than 80% of that year's tax was collected at source, such as through PAYE. That test pulls in most people filing from abroad: expats with UK rental profits are the group most likely to be drawn in, because nothing is collected at source on rental income beyond any Non-Resident Landlord Scheme withholding, and our comparison of DIY filing versus using an accountant covers how the whole filing cycle works for non-residents.

Why the first bill is roughly 150%

For a first-time filer there is no previous year, so nothing was paid in advance. That means 31 January 2027 collects the entire 2025/26 liability at once, and, if the bill is over £1,000 and mostly not collected at source, the first 2026/27 payment on account lands the same day: half the 2025/26 bill again. A £20,000 liability becomes a £30,000 January payment, with another £10,000 following on 31 July 2027. New arrivers claiming the FIG regime are squarely in scope, because a claim year costs the £12,570 Personal Allowance and the £3,000 CGT annual exempt amount, so UK salary, rental profits or gains are taxed from the first pound and plenty of first FIG returns produce a meaningful bill even with every foreign source relieved; our guide to the first FIG filing season works through the timeline. Knowing the number in October, with three months to arrange the cash, is a very different experience from learning it on 29 January.

What you can do about it

The instalments are not fixed in stone. If your UK income falls away, for example because you have left the UK part-way through a year, you can ask HMRC to reduce your payments on account so they match what you actually expect to owe, either online or on form SA303, as our guide to leaving the UK forms and refunds explains; reduce them too far, though, and interest runs on the shortfall. The other first-year trap is the filing route: HMRC's free online service cannot file the SA109 residence pages, so a non-resident or FIG return means a paper return received by 31 October 2026 or commercial software or an agent by 31 January 2027, and discovering that in mid-January narrows your options badly. Horizon prepares non-resident and expat returns on fixed fees from £550, and filing early buys you the one thing payments on account respond to: time to plan the cash.

Go deeper

Sources and further reading

This is general information for the 2026/27 UK tax year, not personal tax advice; speak to a Chartered Tax Adviser about your own position.

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