Reduce payments on account: a Self Assessment guide for 2026
If your income has fallen, your next Self Assessment payment may still reflect a much better year. That can put unnecessary pressure on cash flow. You can ask HMRC to reduce payments on account when you reasonably expect the relevant tax bill to be lower, but the amount needs to follow a realistic calculation.
This guide explains what to review before January 2027, how a reduction works and what happens if your estimate is too low. It is for sole traders, landlords and other individuals completing Self Assessment, including readers in Bromley, London and across the UK.
What are Self Assessment payments on account?
Payments on account are advances towards your next Self Assessment bill. They normally fall due on 31 January and 31 July, with each instalment based on half the previous year's relevant liability. They can include Class 4 National Insurance for self-employed people.
You normally do not need them if the previous year's relevant bill was below £1,000, or more than 80% of your tax was collected outside Self Assessment. Check the actual figures in your statement rather than assuming that being employed, or earning less this month, removes the requirement. See HMRC's payments on account guidance.
The calculation is not simply half every amount on your last tax return. Tax deducted at source is taken into account, while Capital Gains Tax and student loan repayments are excluded from payments on account. HMRC's calculation rules explain the adjustments. Using your final calculation and statement is safer than copying last January's bank payment, which may have included several different charges.
Which tax year are you reducing before January 2027?
Keep the completed year and the current year separate. The 2025/26 tax year ended on 5 April 2026. Its usual online filing and payment deadline is 31 January 2027, as confirmed in HMRC's Self Assessment deadlines.
For someone who needs payments on account, the next dates normally work like this:
31 January 2027: any remaining 2025/26 balance, plus the first payment on account for 2026/27.
31 July 2027: the second payment on account for 2026/27.
31 January 2028: any remaining 2026/27 balance, together with the next year's first payment on account if required.
A fall in your income during 2026/27 may support reducing the two 2026/27 instalments. It does not, by itself, reduce tax already owed for 2025/26. Label both years in your cash-flow plan so you do not mistake a lower advance payment for a reduction in the whole January bill.
When might a reduction be appropriate?
HMRC's claim guidance identifies three broad reasons: lower business profits or other income, increased tax relief, or more tax deducted at source than in the previous year. The important question is how those changes affect your expected liability.
For example, a sole trader may have lost a regular contract, reduced their working hours or stopped trading. A landlord may have a prolonged rental void. Someone moving into employment may have more tax collected through PAYE. Each is a reason to review the calculation, rather than an automatic entitlement to a particular reduction.
Turnover and profit can move differently. If sales fall but expenses fall even faster, taxable profit may not decline. Equally, lower trading profit could be offset by higher rental income, savings interest or dividends. Start with the whole personal tax position, then work out what remains payable through Self Assessment.
Build a forecast you can explain
A useful forecast does not need to be complicated, but it should show how you reached the estimate. Start with up-to-date bookkeeping and separate figures already known from assumptions about the rest of the year. A single quiet month is a weak basis for predicting twelve months of income.
Confirm the starting point. Gather the previous return, tax calculation, current statement and payments already made. Identify which year each amount belongs to.
Bring the current figures up to date. Reconcile bank records, sales and expenses. Check for missing transactions and duplicate entries before relying on a profit report.
Forecast the remaining months. Consider confirmed work, likely renewals, seasonal peaks and known costs. Write down why you expect a contract or income source to change.
Add your other income and tax deductions. Include employment, property and investment information where relevant. Check the evidence for any relief included in the estimate.
Calculate the tax, then the proposed instalments. Do not assume that a 20% fall in revenue means a 20% fall in tax. Allowances, tax bands and the mix of income can change the result.
Keep a dated copy of the calculation with a short explanation. You could record the end date of a contract, the period a property was empty and the assumptions used for future income. Set a review date at the same time, so the forecast stays useful as the year develops.
A worked example: reducing £3,000 instalments
This is an illustrative example, not a client case. Assume a sole trader's relevant 2025/26 liability is £6,000, after the appropriate adjustments. Their two payments on account for 2026/27 would normally be £3,000 each.
After losing a contract, they prepare a complete forecast showing an expected relevant 2026/27 liability of £4,000. On those assumptions, a claim could reduce each instalment to £2,000. The immediate cash-flow difference is £1,000 at the January payment date and another £1,000 in July.
Now suppose they also have a £700 balancing payment for 2025/26. Their January 2027 total would be £2,700 after the reduction: £2,000 for the new year's first instalment plus the £700 old-year balance. The reduction does not remove that £700.
HMRC requires the two adjusted instalments to be equal. You cannot allocate the whole reduction to January just because that is the tighter month. The example assumes no other debts, credits or charges on the account; your statement may contain additional entries.
How to ask HMRC to reduce payments on account
You can use your HMRC online account, view the latest Self Assessment return and select the option to reduce payments on account. There is also an SA303 route: HMRC's claim page links to the online service and postal form. If posting the form, gather the information first, complete it on screen, then print and send it as instructed.
Provide the relevant year, proposed amounts and reason for the reduction. Be specific: an explanation of reduced expected profit supported by a forecast is more useful than saying you would prefer a smaller bill. HMRC's claim validity guidance explains that inability to pay alone is not a satisfactory reason.
Save the submission confirmation and check your statement once the adjustment has been processed. Compare the two instalments, the tax year and any balancing payment against your calculation. If an accountant submits the claim for you, ask for a copy of the figures and explanation used so your own cash-flow plan matches.
What if you reduce the payments too far?
If the final liability is higher than the reduced estimate, additional tax becomes payable and interest can arise on the underpaid instalments. HMRC's legal guidance on payments on account explains how interest runs from the original payment dates. A processed claim does not mean HMRC has agreed your forecast is correct.
Returning to the example, suppose the relevant 2026/27 liability eventually reaches £5,000, while only £4,000 was paid. That leaves £1,000 outstanding. The appropriate instalments would have been £2,500 each, so the £500 shortfall at each original due date can attract interest. Waiting until the following January can therefore cost more than updating the estimate sooner.
Review the forecast if a new contract arrives or your circumstances change. HMRC permits revised claims, including increases to previously reduced amounts. Keep the updated calculation and arrange any additional payment promptly. The original payment deadlines do not move when a claim is adjusted.
Common questions before making a claim
Can I reduce payments to zero?
Potentially, if your expected position supports having no payments on account to make. Closing a business or moving into employment is not enough on its own: other taxable income or remaining liability can still matter. Calculate the full year's position before choosing zero.
Does filing early make the tax payable earlier?
Submitting the 2025/26 return before the normal January deadline does not bring that standard payment deadline forward. It gives you a clearer starting point for planning. Review the completed return and the current-year forecast together rather than leaving both calculations until the final week.
What if the tax is correct but I cannot afford it?
That is a separate cash-flow problem. HMRC may allow an affordable instalment arrangement, often called Time to Pay. Read its guidance on difficulty paying a tax bill and make contact early. Do not use an unsupported reduction claim as a substitute for discussing payment difficulties.
Self Assessment support in Bromley, London and across the UK
If you want help reviewing the figures, mysimplytax.com provides Self Assessment services for individuals with different income sources. A useful starting pack is your latest return and statement, current bookkeeping, expected income changes and details of tax already deducted.
Before January, aim to answer three questions: what is still owed for the completed year, what is a reasonable estimate for the current year, and when will you review it again? Those answers turn a possible reduction into a manageable payment plan.
Contact mysimplytax.com to discuss your Self Assessment position and the support you need. Bring the figures behind the forecast so the next step can be based on your circumstances.
Guidance checked against HMRC sources on 22 September 2026. Examples are illustrative; individual calculations depend on your circumstances.
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