The Ultimate Guide to July Payments on Account: Everything You Need to Succeed

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July can be a stressful month for business owners, especially when a tax bill lands just as you're trying to keep cash flowing through the business.

If you've been asked to make a payment on account by 31 July 2026, don't worry — we're here to help you make sense of it in plain English.

A payment on account is simply an advance payment towards your next Self Assessment tax bill. HMRC usually asks for this when your last tax bill was big enough and not enough of it was collected through PAYE.

Do you need to pay?

You’ll usually need to make payments on account if:

• your last Self Assessment tax bill was more than £1,000
• less than 80% of your tax was collected at source, such as through PAYE
• you’re self-employed, in a partnership, or receive untaxed income such as rent

In most cases, HMRC splits this into two advance payments each year. The July payment is usually the second instalment, and it is normally 50% of your previous year’s tax bill for Income Tax and Class 4 National Insurance.

How to work out what you owe

HMRC usually works this out for you automatically through your Self Assessment account.

As a simple guide:

(your 2024/25 Income Tax and Class 4 National Insurance bill) / 2 = your July payment on account

So if your relevant tax bill for 2024/25 was £6,000, your July payment on account would normally be £3,000.

The important thing to remember is that HMRC bases this on last year’s figures. If this year is looking very different, you may be able to reduce it.

If your income has dropped

If you expect your income to be lower this year, you can ask HMRC to reduce your payments on account.

This is usually done by submitting form SA303 or by making the change through your online Self Assessment account.

That can be really helpful for cash flow, but it’s important not to reduce it too far. If you pay less than you should and your final tax bill ends up higher, HMRC can charge interest on the shortfall.

If you're not sure whether a reduction is sensible, we can help you look at the numbers before you make the change.

What happens if you miss the 31 July deadline?

If your payment reaches HMRC after 31 July 2026, interest starts building from 1 August 2026.

At the moment, late payment interest is 7.75% per year, charged daily until the amount is paid.

That means even if there isn’t an immediate penalty on day one, leaving it unpaid can still become expensive surprisingly quickly.

A few practical cash flow tips

If July feels tight, a bit of planning can make a big difference. We usually suggest:

• setting money aside regularly in a separate tax savings account
• checking your bookkeeping is up to date so there are no surprises
• reviewing your expected profit before the deadline
• looking at whether a reduction using SA303 is appropriate
• making sure payment clears before 31 July

If you’re already feeling behind, it’s better to deal with it early rather than ignore it.

How we can help

At Titus Accounts, we help business owners stay on top of deadlines like this without the stress.

If you want, we can help you:

• check whether payments on account apply to you
• work out what you’re likely to owe
• review whether your July payment can be reduced
• plan ahead so the next deadline feels more manageable

You don’t need to figure it all out on your own.

Simple disclaimer

This guide is for general information only and isn’t personal tax advice. If you’re unsure what applies to your situation, we recommend getting tailored advice before taking action.

Speak to a Professional Accountant
https://titusaccounts.co.uk/