As the sun (hopefully) comes out for a little longer and temperatures rise with the approach of summer, the next Self Assessment payment on account deadline is looming. For individuals who file Self Assessment tax returns, the second payment on account is due by 31 July 2025. 

Understanding the July Payment

Payments on account are advance payments towards your next tax bill (including Income Tax and Class 4 National Insurance if you’re self-employed). Each payment is typically half of the tax you owed the previous year. 

The first payment on account for the 2024–25 tax year was due on 31 January 2025, and the second is due on 31 July 2025.

If your previous year’s tax bill was more than £1,000, you must make these payments, unless you paid more than 80% of your tax through PAYE or other deductions at source.

What should you do if you can’t pay on time?

If you’re concerned about meeting the 31 July 2025 deadline, you may be able to agree a Time to Pay arrangement with HMRC. This allows you to spread the cost of your tax bill over regular monthly payments, allowing you to manage your cash flow and avoid late payment penalties, provided you stick to the agreed plan. You will have to pay interest on the amounts outstanding until they’re cleared.

Key points about Time to Pay

• Eligibility:
  • If your tax bill is less than £30,000, you can set up a payment plan online without needing to contact HMRC.
  • If you owe more than £30,000, you’ll need to contact HMRC directly to discuss your options. Before you contact them, ensure you have the following details to hand:
• If you can pay in full
• How much you can repay each month
• If there are other taxes you need to pay
• How much money you earn
• How much you usually spend each month
• What savings or investments you have
• If you have savings or assets, HMRC will expect you to use these to reduce your debt as much as possible.
• Setting Up:
  • You must have filed your most recent tax return before arranging a Time to Pay plan.
  • The plan allows you to spread payments over a maximum of 12 months, making budgeting more manageable.
• Consequences:
  • Missed payments will result in interest charges and possible penalties.
  • You must keep up with the agreed monthly payments.

Additional tips and deadlines

• Balancing Payment:
  • If your actual tax bill for the 2024–25 tax year is higher than the total of your two payments on account, you may need to make a ‘balancing payment’ by 31 January 2026.
• Payment Methods:
  • You can pay your tax bill via online banking, debit card, Direct Debit, or by cheque (posted in advance to allow for processing).
  • Allow sufficient time for your payment to reach HMRC before the deadline, especially if using slower methods like cheque or BACS.
  • See our How to Pay Guide.
• Looking Ahead:
  • If you know your income for the year to 5^th April 2025 is lower than your income during the year before, your payments on account will probably have been set too high. It’s possible to reduce those and therefore reduce the July liability but this needs to be done carefully as you could incur interest if you reduce them too far. Get in touch now if you’d like to discuss this or would like to get your Tax Return for the year ended 5^th April 2025 prepared before the end of July to be sure of your liability.

And finally…

With the July payment deadline approaching, now is the time to ensure you have the cash available to make your payment in good time. HMRC are far more receptive if you contact them before the due date for the payment than after, so don’t ignore the issue if you know there’s likely to be one!