Understanding Your 31 July Tax Payment Deadline (Second Payment on Account)
-
If you complete a Self Assessment tax return, 31 July is an important date for your calendar.
For many sole traders, contractors, landlords and individuals, this is when the second payment on account is due. This can sometimes cause confusion, with the date being significantly later than the end of the tax year. However, the important thing to know is that this is not an additional tax.
Rather, it is an advance payment towards your current tax year’s Self Assessment bill, based on the tax you owed the previous year.
This mid-year deadline is easily managed by checking your HMRC account early, understanding how the figure has been calculated and planning your cashflow.
What is the second payment on account?
Your second payment on account is an advance payment towards your next Self Assessment tax bill.
HMRC typically asks for two payments on account if your previous Self Assessment bill was more than £1,000 and less than 80% of the tax you owed was collected at source, such as through PAYE.
In this case, there are usually two payments each year:
- The first payment on account is due by 31 January
- The second payment on account is due by 31 July
To put it simply, the second payment on account is the second instalment towards the tax HMRC expects you to owe for the current tax year.
It is not a penalty or an extra tax bill. It is HMRC’s way of spreading your expected Self Assessment tax across the tax year rather than waiting for the full amount to be paid when the tax year has ended.
When is the second payment on account due?
The second payment on account is due by midnight on 31 July.
The typical Self Assessment cycle is split into two parts, like this:
- 31 January: This is the deadline for your online tax return, any balancing payment for the previous tax year and your first payment on account for the current tax year.
- 31 July: This deadline is for your second payment on account towards the current tax year.
Bank transfers, direct debits and reference errors can all cause delays so it is worth checking the amount you will need to pay well before the deadline. Leaving payment until the last day can create unnecessary stress, especially if HMRC does not receive or allocate the payment correctly straight away.
If you are not sure what you owe, check your Self Assessment statement through your HMRC online account or ask your accountant to review it with you.
How does HMRC calculate your second payment on account?
Your HMRC second payment on account is usually based on the tax you owed through Self Assessment for the previous tax year. In most cases, each payment on account is half of your previous year’s relevant Self Assessment bill.
For example, if your previous year’s Self Assessment tax bill was £4,000, HMRC would ask for:
- £2,000 by 31 January as your first payment on account
- £2,000 by 31 July as your second payment on account
These payments are then set against your actual tax bill when your next Self Assessment return is completed.
If your final tax bill is higher than expected, you may need to make a balancing payment by the following 31 January. If your income has fallen or your payments on account were too high, you may have less to pay or be due a refund.
Why is my second payment on account?
A second payment on account showing as £0 can be correct, but it is still worth checking in your Self Assessment statement or online account.
Common reasons for a second payment on account to be £0 include:
- Your previous Self Assessment tax bill was under £1,000
- More than 80% of the tax you owed was collected outside Self Assessment, such as through PAYE
- A reduction has already been applied
- A credit on your Self Assessment account has covered the amount due
Often, a second payment of £0 is nothing to worry about. In other cases, it may be linked to a credit amendment or calculation that needs a closer look.
Mollan & Co can review your HMRC account, Self Assessment tax return and cash flow position if something does not look right. We will explain what the figures mean in plain English, so you know whether you need to pay, reduce, reclaim or simply keep records for later.
How to pay your HMRC second payment on account
You should always use an official HMRC Self Assessment payment method to pay your second payment on account.
The main ways to pay include:
- Online banking or Faster Payments
- CHAPS
- Bacs
- Direct debit
- Debit card or corporate credit card
- Cheque
- Payments in advance through HMRC’s Budget Payment Plan
When making your payment, use the correct Self Assessment reference. This is usually your 10-digit Unique Taxpayer Reference, also known as your UTR, followed by the letter K. Using the wrong reference can delay HMRC so it is important to make sure these details are correct.
Can you reduce your second payment on account?
Yes, you can ask HMRC to reduce your payments on account if you know your current year’s tax bill will be lower than last year’s.
This may apply if:
- Your income has dropped
- Your expenses have increased
- Your work has become more seasonal
- You have stopped trading
- You have moved into employment
Reducing your second payment on account can help with cash flow, but it should be done carefully.
If you reduce the payment too far and your final tax bill is higher than expected, HMRC may charge interest on the difference. That is why it is sensible to base the reduction on realistic figures, not guesswork.
At Mollan & Co, we can help you estimate your tax bill before you ask HMRC to reduce your payments. We will look at your income, expenses, previous tax position and current cash flow, then give you a clear view of what is practical.
Cash flow planning for your 31 July tax payment
The 31 July deadline can be difficult if your income changes during the year.
This is especially common for sole traders, contractors and landlords. You may have busy periods, quieter months, delayed invoices or unexpected costs. Without some forward planning, the July payment can arrive at an awkward time.
A few simple habits can make a big difference:
- Check your HMRC account early, rather than waiting until July
- Keep bookkeeping up to date throughout the year
- Set money aside regularly for tax
- Use savings pots or separate accounts for tax reserves
- Review your income and expenses before reducing payments on account
- Forecast upcoming tax, VAT and other business costs together
- Use cloud accounting tools to keep records clear and current
As cloud-based accounting specialists, Mollan & Co helps clients use tools like Xero to stay organised day to day. We help you to see what is coming in, what is going out and what you may need to set aside for tax.
That joined-up support is particularly useful if your finances cross over between personal and business matters. For example, if you are a contractor with a limited company, a landlord with multiple properties or a sole trader managing variable income.
Need help with your 31 July Self Assessment payment?
The 31 July second payment on account deadline does not need to be confusing. It is simply an advance payment towards your current tax year’s Self Assessment bill, calculated by HMRC in relation to what you paid in the previous year.
You can make this payment using an official HMRC payment method such as online banking, direct debit, debit cards, CHAPS, Bacs, or cheque and it may be possible to reduce this payment if your income has fallen.
Mollan & Co supports sole traders, contractors, landlords and individuals with Self Assessment, bookkeeping and cash flow planning.
If you need help checking what is due, understanding your HMRC statement or planning ahead for future tax payments, contact our team for clear, practical advice.
Author ProfileI'm the owner and Managing Director of Mollan & Co Accountants. I'm a skilled and efficient accountant with more than 20 years of experience in the industry.
I developed valuable skills in business and commercialisation through my work in the science and technology departments within the Scottish University sector. Then, in 2001, I formed my own internet-based marketing company, producing and distributing 360° virtual reality tours for the Scottish tourism sector.
I now use my commercial skills, expert tax knowledge and first-hand experience to help other businesses grow and flourish through strong accounting practice.
Our success at Mollan & Co is directly related to the success of our clients.
