Payment On Account


PAYMENT ON ACCOUNT (POA) rules govern the amount and timing of tax payments under self-assessment.

Each PAYMENT ON ACCOUNT is based on 50% x LAST TAX YEAR’S RELEVANT AMOUNT.

RELEVANT AMOUNT = LAST YEAR’S INCOME TAX + CLASS 4 NICs – AMOUNT ALREADY TAXED AT SOURCE


PAYMENT ON ACCOUNT (POA)
1ST POA31 JAN IN TAX YEAR50% x LAST YEAR’S (INCOME TAX + CLASS 4 NICs – AMOUNT TAXED AT SOURCE)
2ND POA31 JULY AFTER TAX YEAR50% x LAST YEAR’S (INCOME TAX + CLASS 4 NICs – AMOUNT TAXED AT SOURCE)
BALANCING PAYMENT31 JAN AFTER TAX YEARTHIS YEAR’S TAX DUE – (1ST AND 2ND POA)

CAPITAL GAINS TAX (CGT) and CLASS 2 NICs are due on 31 JANUARY AFTER THE TAX YEAR, at the same time as the BALANCING REPAYMENT.

The timing of PAYMENTS ON ACCOUNT (POA) and BALANCING PAYMENTS (BAL. PAY.) means that the BALANCING PAYMENT for one tax year is paid at the same time as the 1ST POA for the following tax year. For example, as shown below, on the 31 JANUARY 2021 a taxpayer will need to pay the BALANCING PAYMENT for tax year 2019/20 AND the 1ST POA for the following tax year 2020/21.


2019/202020/212021/22
31 JANUARY 20201ST POA
31 JULY 20202ND POA
31 JANUARY 2021BAL. PAY.1ST POA
31 JULY 2021 2ND POA
31 JANUARY 2022BAL. PAY.1ST POA
31 JULY 20222ND POA
31 JANUARY 2023BAL. PAY.

There is no requirement to make PAYMENTS ON ACCOUNT when;

  • The RELEVANT AMOUNT for the previous tax year is less than £1,000 or,
  • 80% of the INCOME TAX and CLASS 4 NICs due are paid by deduction at source.

Most people in employment do not make PAYMENTS ON ACCOUNT because more than 80% of their INCOME TAX and CLASS 4 NIC’s (if they have any) are paid through PAYE.