Are you ready for Payment on Account day?

The self-employed calendar is full of deadlines and dates, it’s important to be clear on which are essential to pay attention to and prepare for. If you’re new to freelancing, it can feel overwhelming, but even if you’re established, it can be easy to forget.

This month’s deadline - on July 31st, is your next Payment on Account day. If you started freelancing in 2023-2024 (or before), you’re likely to have a payment due. If you start freelancing after April 2024, this won’t apply to you this year, but it will next year!

1. What is Payment on Account?

Payment on Account is HMRC’s way of collecting tax in advance from people who don’t have tax automatically deducted—like freelancers and sole traders.

Rather than waiting for you to pay everything in one big chunk at the end of the tax year, HMRC splits the expected bill for the next tax year into two instalments:

• One in January

• One in July

These are based on the tax you owed for the previous year. So if your 2023-24 tax bill was £4,000, HMRC assumes your 2024-25 earnings will be similar and asks you to pay £2,000 in January 2025 and £2,000 in July 2025.

Then, in January 2026, you’ll file your tax-return and either pay any extra or get a refund if you’ve overpaid.

» There’s more on Payment on Account here

2. What is the upcoming deadline?

The next deadline is 31 July 2025.

This applies to people who already made a Payment on Account in January 2025, based on their 2023–24 tax return. You’re now being asked to pay the second instalment toward your 2024–25 tax.

You should have had a letter or digital reminder from HMRC, either by post or in your HMRC online account, but even if you haven’t seen a reminder, it’s worth checking.

If you think you’re due to pay but haven’t heard anything, log into your HMRC account or contact them urgently. You’re still responsible for paying on time.

3. How much will I need to pay?

Usually, HMRC asks for 50% of last year’s tax bill in each instalment.

Example:

• 2023–24 tax bill = £3,000

• January 2025: £1,500 (already paid)

• July 2025: £1,500 (now due)

You can see your exact amount due by logging into your HMRC online account. Go to the Self Assessment section and look under "View your Self Assessment return" or "What you owe." It’ll show both the payment and the due date.

You’ll reconcile the final amount when you file your 2024–25 return in January 2026.

4. What if I can’t afford the upcoming bill?

Because you’re effectively paying in advance, it’s possible you might not have made sufficient money this year to have put aside enough for your payment on account.

You’ve got a few options:

• Set up a Time to Pay plan: Use your HMRC online account to arrange monthly instalments. It’s quick, and approval is often automatic.

• Ask to reduce your Payment on Account: If you’re earning less this year, you can apply to lower the July payment. But be careful—if you reduce it too much and end up owing more, HMRC will charge interest on the shortfall.

• Pay what you can: Even a partial payment reduces how much interest builds up if you’re late.

Don’t ignore it. The earlier you act, the more options you have.

And it's important to take action - missing a payment on account can even lead to HMRC investigations, which are costly.

5. But I haven’t registered for Self‑Assessment?

If you’ve only just gone self-employed or started freelancing, and haven’t yet registered for Self Assessment, this deadline probably doesn’t apply to you—yet.

You’ll need to:

• Register by 5 October 2025 if you started freelancing during the 2024–25 tax year.

• Submit your first return by 31 January 2026.

Once HMRC sees that your tax bill is over £1,000, you’ll likely start making Payments on Account the following year.

In short: if this is your first tax year, you probably won’t need to pay anything by 31 July—but it’s worth checking your situation if you're unsure.

6. Where can I find support if I’m not sure what to do?

This stuff can be confusing—especially if it’s your first time dealing with it. Here’s where to get help:

• HMRC Self Assessment helpline – 0300 200 3310

• Your HMRC online account – Often the fastest way to check what’s due

• Money Helper - have some excellent guides to read

• Your freelance communities - if you’re stuck and not sure, get peer-support from fellow freelancers, but bear in mind, it’s unlikely they can give you professional tax advice. Use the authoritative sources above first.

• An accountant or bookkeeper – A one-off session can make things clearer for the future. Consider finding a local accountant via Unbiased.

Further reading on Payment on Account

» Freelancing.Support guide to Payment on Account

» Missing payment on account could trigger HMRC investigation

» HRMC’s pages on Payment on Account

» Loud and Clear’s podcast episode on Payment on Account

» Crunch on how much you might need to be putting aside

That’s all for this week! ✌️mk