HM Revenue and Customs (HMRC) is reminding millions of Self Assessment taxpayers that the second payment on account for the 2025-2026 tax year is due by July 31, 2026. Experts caution that many individuals, particularly those new to freelancing, may be caught off guard by this deadline.
What Are Payments on Account?
Payments on account are advance payments towards your tax bill, including Class 4 National Insurance, if you owe more than £1,000. They are typically due on January 31 and July 31 each year. The July deadline requires taxpayers to pay half of their previous year's tax bill, with the final balancing payment due the following January.
Expert Warnings and Advice
Matthew Knight, chief freelance officer at Freelancing.Support, warned: "While everyone knows the January 31 deadline, many who are new to freelancing often get caught out by payment-on-account deadlines, which asks you to pay your taxes ahead of your income." He recommended getting into the habit of doing accounts monthly or quarterly, noting that Making Tax Digital could help small businesses stay on top of their taxes.
Samuel Mather-Holgate, managing director and IFA at Mather and Murray Financial, said: "The Self Assessment system is creaking because it asks millions of ordinary people to behave like unpaid tax administrators. Staying up to date matters. If you miss the July 31 payment on account you can quickly face interest, penalties and nasty cash-flow shocks." He called for clearer prompts and earlier warnings from HMRC.
Nouran Moustafa, practice principal and IFA at Roxton Wealth, added: "Self Assessment needs year-round organisation. The July 31 payment catches people off guard because it lands months after the January rush, just when many self-employed people, landlords and business owners are focused on keeping cash moving through the summer." She advised making tax part of managing money all year round and putting aside a percentage of every payment.
Practical Steps to Avoid Penalties
Experts recommend the following actions: check your online HMRC account now, do not assume payments on account are optional, set aside money weekly, and contact HMRC before the deadline if you cannot pay. Missing the deadline can result in interest charges and penalties, and silence is usually the most expensive option.
If your income has dropped significantly, you may be able to reduce your payment on account, but only with genuine evidence. HMRC offers payment plans for those struggling with cash flow, and acting before the deadline is crucial.
