Payment on account is a way of paying your tax bill in advance. You make two payments on account every year, each one is half of your previous year’s tax bill. You pay the first one by 31 January and the second one by 31 July. If you still have tax to pay after making your payments on account, you pay the rest by 31 January next year. This is called a balancing payment.
Payment on account only applies if your tax bill is more than £1,000 or if you pay less than 80% of your tax through your income or savings. You can reduce your payments on account if you think your tax bill will be lower than last year. If you overpay or underpay, you will get a refund or be charged interest.