Expecting lower profits 2024-25 compared to 2023-24? You can ask HMRC to reduce your 31 July 25 tax payment on account. Act early to manage cash flow. Use your online account or we can handle it for you.
Self-assessment taxpayers normally pay their income tax in three instalments each year. The first two payments on account are due on 31 January during the tax year and 31 July after the tax year ends. These are each based on 50% of the previous year’s net income tax liability.
This means that the 31 January 2025 (now passed) and upcoming 31 July 2025 payments are both based on your 2023–24 tax liability.
A final balancing payment is due on 31 January 2026, once your actual tax bill for 2024–25 has been confirmed through your submitted tax return.
If you expect your income or profits for 2024–25 to be lower than for 2023–24, you can ask HMRC to reduce your 31 July 2025 payment on account. This can be done through your HMRC online account or by submitting form SA303 by post. You must provide a reasonable estimate of your expected tax liability.
If we are your registered tax agent we can undertake this election for you.
There is no limit to how many times you can apply to adjust your payments. However, if you reduce your payments too far and underpay, HMRC may charge interest or penalties on the shortfall.
You are not required to make payments on account if:
- Your net Income Tax liability for 2023–24 was less than £1,000, or
- At least 80% of your 2023–24 tax liability was collected at source (e.g. through PAYE).
If your taxable profits are likely to increase in 2024–25, there’s no need to notify HMRC in advance, but you should be prepared for a higher balancing payment in January 2026.
