Your Second Tax Payment Is Due 31 July: What You Need to Know Now

Your Second Tax Payment Is Due 31 July: What You Need to Know Now

If you're self-employed, a landlord, or you file a Self Assessment tax return, there's a payment coming up that surprises a lot of people. It's due on 31 July 2026, and it's easy to forget about, because it doesn't feel like a "real" tax bill in the same way January does.

Let's keep this simple.

What is this payment?

It's called a payment on account. If your last tax bill was over £1,000, and most of your income isn't taxed automatically through PAYE, HMRC assumes you'll owe a similar amount again this year. So instead of waiting for one big bill, HMRC splits your expected bill into two advance payments:

First payment: 31 January
Second payment: 31 July

Each one is normally 50% of your previous year's tax bill.

A real example: meet Tom

Tom is a self-employed electrician. His tax bill for the 2024/25 year was £6,000.

Because of this, HMRC asked Tom to pay:

£3,000 on 31 January 2026 (first payment on account)
£3,000 on 31 July 2026 (second payment on account)

These two payments add up to £6,000 — the same as last year's bill. HMRC is simply asking Tom to pay next year's tax in advance, based on what he earned before.

Why this catches people out

It doesn't match this year's income. HMRC bases this payment on what you earned last year, not what you're earning now. If your income has dropped, you could be paying more than you'll actually owe.

There's no reminder that feels urgent. January has the big "deadline energy." July often creeps up quietly, especially if summer is a busy or quiet trading period for your business.

Interest starts immediately if you miss it. HMRC does not give a grace period. Interest is charged from 1 August, and currently sits at 7.75% per year on the overdue amount. After 30 days, a further 5% penalty can be added on top.

What if your income has actually gone down?

This is the good news: you don't have to pay the full amount if you know you'll owe less this year.

If your income for 2025/26 is genuinely lower than 2024/25 (fewer contracts, a client lost, business slower), you can apply to reduce your payment on account. You can do this:

Online through your HMRC personal tax account, or
By post using form SA303

You'll need a reasonable estimate to back this up, such as your year-to-date bookkeeping or a sensible forecast. If you reduce it too far and your final bill turns out higher, HMRC will charge interest on the shortfall. So the number needs to be realistic, not just optimistic.

What if you simply can't pay it?

Don't ignore it. Contact HMRC before 31 July to ask about a Time to Pay arrangement. This lets you spread the payment in instalments. You'll usually still pay interest, but you avoid the extra 5% late payment penalty.

What to do this week

Log into your HMRC account and check if a payment is due, and how much.
Compare it to your actual income this year. If it's clearly too high, gather your numbers together.
If it looks right, make sure the money is set aside so 31 July doesn't catch you short.
If you're not sure, ask us. We can tell you quickly whether the amount is correct, whether a reduction makes sense, or whether a payment plan is the better route.

We're here to help

Payments on account are one of the most common sources of confusion and cash flow stress for self-employed clients. If you'd like us to check your figures before the deadline, get in touch this week — there's still time to sort this properly before 31 July.

This article is for general information only and is not personal tax advice. Interest rates and thresholds mentioned are correct at the time of writing but can change — please check GOV.UK or speak to us for your current position.