Payments on Account for Landlords: The 31 July Bill Explained (2026/27)
Last updated 24 June 2026 · 8 min read · By the LandlordTaxAi Editorial Team
The short answer
If your Self Assessment bill is over £1,000 and less than 80% of your tax is collected at source, HMRC makes you pay tax in advance via payments on account: two instalments of 50% of last year’s bill, due 31 January and 31 July. The calculator above shows what you’ll owe and when.
The first Self Assessment bill that includes payments on account is a nasty surprise for many landlords — you can end up paying around 150% of your tax in one January hit. It’s not a penalty; it’s HMRC collecting next year’s tax in advance. Understanding it means no shocks.
The calculator above breaks down your January and July payments for 2026/27. This guide explains the rules, the deadlines, and how to reduce the payments if your income has fallen. For all the dates, see payments on account deadlines.
Free calculator · no sign-up
Payments on Account Calculator
Work out your 31 January and 31 July payments on account from last year's Self Assessment bill.
Result
- Personal allowance
- £12,570
- Taxable income
- £32,430
- Income Tax due
- £6,486
- Take-home (income − tax)
- £38,514
Applies when bill > £1,000 and under 80% collected at source. Each payment is 50% of last year's bill.
When payments on account apply
You’re required to make payments on account if both of these are true for the tax year:
- Your Self Assessment income tax bill is more than £1,000, and
- Less than 80% of your total tax was already collected at source (e.g. through PAYE)
Most landlords with significant rental profit and no large PAYE deduction will be caught — rental income has no tax taken at source, so the 80% test is easily failed.
How the payments are calculated
Each payment on account is 50% of your previous year’s Self Assessment bill. You make two: one with your balancing payment in January, and one in July.
Then, when your actual bill for the year is known, you settle the difference with a balancing payment the following January — which is also when the first payment on account for the next year falls due. That’s why the January bill can feel so heavy.
| Date | What’s due |
|---|---|
| 31 January | Balancing payment for last year + 1st payment on account (50%) |
| 31 July | 2nd payment on account (50%) |
| Next 31 January | Balancing payment + next year’s 1st payment on account |
In your first year of payments on account you effectively pay 150% of your tax in January — the full balancing payment plus a 50% advance. Budget for it.
Reducing your payments on account
Because the payments are based on last year, they can be too high if your income has dropped — for example after a void-heavy year or selling a property. You can apply to reduce your payments on account to a more realistic figure.
Be careful: if you reduce them too far and end up owing more, HMRC charges interest on the shortfall. Only reduce to what you genuinely expect to owe.
No more January payment shocks
LandlordTaxAi forecasts your balancing payment and payments on account all year, so you always know what’s due on 31 January and 31 July — and can set the cash aside.
See how it worksA worked example
Hannah’s 2025/26 Self Assessment bill is £4,000, with no tax collected at source. She sees her first payments on account.
| Balancing payment for 2025/26 (due 31 Jan 2027) | £4,000 |
| 1st payment on account 2026/27 (50%) | £2,000 |
| Total due 31 January 2027 | £6,000 |
| 2nd payment on account (due 31 July 2027) | £2,000 |
| Total paid towards 2026/27 in advance | £4,000 |
Hannah’s January bill is £6,000 — the £4,000 she owes for last year plus a £2,000 advance. The shock is real, which is why planning ahead matters.
Frequently asked questions
What are payments on account?
Advance payments towards your next Self Assessment bill — two instalments of 50% of last year’s tax, due 31 January and 31 July.
When do I have to make them?
When your Self Assessment bill is over £1,000 and less than 80% of your tax was collected at source. Most landlords with rental profit are caught.
Why is my January bill so high?
It combines the balancing payment for last year with the first 50% payment on account for this year — often around 150% of one year’s tax.
Can I reduce my payments on account?
Yes, if your income has fallen you can apply to reduce them — but if you cut them below what you actually owe, HMRC charges interest on the shortfall.
Do payments on account include Class 4 NIC?
For landlords, rental profit isn’t subject to Class 4 NIC, but if you also have self-employment the payments cover income tax and Class 4 NIC together.
What happens after I make both payments?
Your actual bill is reconciled the next January with a balancing payment (or refund), alongside the next year’s first payment on account.
Written and reviewed by the LandlordTaxAi Editorial Team. Our guides are reviewed against current HMRC guidance and updated when the rules change. Operated by LandlordTaxAi, United Kingdom. Follow us on LinkedIn.
Last reviewed: 24 June 2026 · Researched against primary UK sources for the 2026/27 tax year: https://www.gov.uk/understand-self-assessment-bill/payments-on-account; https://www.litrg.org.uk/tax-nic/how-tax-collected/self-assessment-and-tax-returns/self-assessment-tax-payments; https://www.gov.uk/hmrc-internal-manuals/self-assessment-legal-framework/salf303. This article is informational only and does not constitute tax advice. Check the latest details on GOV.UK or with a qualified accountant.