Key Points
- HM Revenue and Customs (HMRC) has issued an urgent warning to millions of Self Assessment taxpayers across the UK regarding the approaching second “Payments on Account” deadline on July 31.
- Payments on account are advance instalments towards the next tax bill, with each payment typically worth half of the previous year’s tax liability.
- The rule primarily affects self-employed workers, sole traders, landlords, and others who file annual Self Assessment returns, provided their last tax bill exceeded £1,000 and less than 80% of their tax was collected at source.
- Taxpayers struggling to clear their balance in one go can utilize the HMRC app, online portals, or arrange flexible weekly or monthly payment plans.
- HMRC reports that more than 110,000 payments have been processed via the official HMRC app since April, with nearly two million customers utilizing the platform since its introduction.
- Failing to meet the deadline or underpaying due to inaccurate reductions can trigger daily interest charges and financial penalties.
London (Oxford Daily) July 23, 2026 — Millions of taxpayers across the United Kingdom are facing a potential financial shock as HM Revenue and Customs (HMRC) issues a strict reminder regarding the fast-approaching second Payments on Account deadline. With just one month left until the July 31 cutoff, self-employed individuals, property landlords, and other Self Assessment participants have been urged to check their obligations or risk falling behind on their liabilities.
What are Payments on Account and who must pay them?
Payments on account are advance payments directed towards a customer’s upcoming Self Assessment tax bill, which include Class 4 National Insurance contributions for the self-employed. Designed to help individuals spread the total cost of their tax obligations rather than confronting a single lump sum every January, the system divides the expected liability into two equal instalments. Each instalment is calculated as half of the total tax owed from the previous year.
As reported by personal finance writer Jade Wright of The Resident, these scheduled instalments fall due by midnight on two specific dates: January 31 and July 31.
Taxpayers are legally required to make these advance payments unless they meet specific exemption criteria. According to official guidelines, customers are exempt if the amount of tax owed in the previous year was less than £1,000, or if more than 80% of their total tax was already settled outside of Self Assessment—such as through a PAYE tax code or automatic deductions on bank savings interest.
Why are taxpayers being warned about a surprise bill?
For many sole traders, freelancers, and small business operators, the second payment on account can catch household budgets off guard, particularly if their business earnings fluctuated over the year. Because the July instalment matches the exact value of the first payment made back in January—representing 50% of the previous year’s overall liability—unprepared individuals frequently find themselves scrambling for liquidity.
As reported by HM Revenue and Customs (HMRC), managing these tax obligations can prove challenging for ordinary citizens. Myrtle Lloyd, HMRC’s Chief Customer Officer, stated that:
“We know managing a Self Assessment tax bill isn’t always straightforward and we are here to help. From paying instantly via the HMRC app to spreading the cost through a payment plan, there’s support available for every customer.”
Ms Lloyd further advised taxpayers to
“Search ‘Pay your Self Assessment tax bill’ on GOV.UK to choose the payment option that works for you.”
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How can taxpayers settle their bills or ease financial pressure?
In response to mounting cost-of-living pressures, HMRC has highlighted several digital tools and flexible arrangements designed to help citizens meet the deadline without facing severe financial distress.
The official HMRC app has emerged as the fastest method for clearance, with more than 110,000 individual payments processed through the software since April. Since the application’s rollout in January 2022, nearly two million Self Assessment customers have used it to monitor payment histories, set automated reminders, and complete transactions swiftly.
For those unable to clear their bills immediately, flexible options remain accessible. HMRC allows eligible customers to configure structured weekly or monthly payment plans. Any money already submitted via these pre-arranged plans will count directly toward the next Self Assessment calculation.
What happens if you cannot afford your payment on account?
Tax experts emphasize that ignoring the deadline or failing to act can lead to compounding financial penalties. As noted in financial advisory breakdowns, while missing a payment on account does not trigger an immediate fixed penalty in the exact manner of a late tax return submission, unpaid balances immediately begin to accrue daily interest based on statutory rates set relative to the Bank of England base rate.
Furthermore, if a taxpayer anticipates that their income has dropped significantly over the current tax year, they possess the legal right to ask HMRC to formally reduce their Payments on Account. However, financial specialists issue a strong caution: if an individual reduces their payments too aggressively and ultimately underpays what they genuinely owe, HMRC will retroactively levy interest charges on the outstanding deficit.
Taxpayers uncertain about their current standing are urged to log into their online GOV.UK accounts or check the HMRC app immediately to verify their statements before the midnight deadline on July 31.
