When are Payments On Account (POAs) made under Self Assessment? How are POAs calculated? What are the consequences of not making a payment on time? Can POAs be reduced?
This is a freeview 'At a glance' guide to Self Assessment Payments On Account (POAs).
Payments On Account (POAs) are paid by some individuals, trustees and personal representatives under Self Assessment, towards their tax liability.
When are POAs required?
Within Self Assessment, POAs are required for a given tax year unless either:
- The previous year's Income Tax and Class 4 National Insurance (NI) liability was less than £1,000 (net of tax deducted at source).
- More than 80% of the Income Tax and NI liability for the previous year was collected at source.
POAs are only calculated in respect of Income Tax and Class 4 NI, not Capital Gains Tax (CGT) (although payments on account of CGT are required in some cases. See CGT: Payment of tax).
When are POAs due?
- The first POA is due on 31 January in the relevant tax year.
- The second POA is due on 31 July following the relevant tax year.
For example:
- First 2024-25 POAs fell due on 31 January 2025.
- Second 2024-25 POAs fall due on 31 July 2025.
How are POAs calculated?
Each POA is 50% of the previous year's Income Tax liability, including Class 4 NI.
If earnings in the current tax year are more than the previous tax year, there may be an additional amount of tax to pay (i.e. beyond the amount paid via POAs). This is known as a balancing payment.
- Balancing payments are due on 31 January following the end of the relevant tax year.
Example
A taxpayer has an Income Tax liability for the 2024-25 tax year of £5,000. They made POAs (based on 2023-24) in January 2025 and July 2025 of £1,500 each.
- The POAs did not cover the tax liability for the year, so a balancing payment of £2,000 is due on 31 January 2026.
- POAs for 2025-26, of £2,500 each (£5,000 x 50%), will be payable on 31 January 2026 and 31 July 2026.
- The total payable on 31 January 2026 is £4,500, being the £2,000 2024-25 balancing payment plus the £2,500 first 2025-26 POA.
- If the taxpayer's Income Tax liability in 2025-26 is more than £5,000, they will have a balancing payment due in respect of that year on 31 January 2027.
Interest and penalties
- If POAs are paid late, Interest is charged from the normal due date for payment.
- There are no penalties for late payment of POAs.
Reducing POAs
A claim can be made to reduce a taxpayer's POAs if they anticipate their current year Income Tax and Class 4 NI liability will be less than the previous year.
Claims must be made by 31 January following the end of the tax year, either within the tax return, online, or by post.
- Online: sign into your online account and select 'Reduce payments on account'.
- Post: complete Form SA303.
When making a claim, the taxpayer must specify the amount they wish to pay and the reason for making a claim.
- If POAs are reduced fraudulently or negligently, HMRC can charge penalties of up to 100% of the tax underpaid, as well as interest.
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