Can I reduce my payment on account if I expect to earn less?
Answered 11 March 2026
Can You Reduce Your Payment on Account If You Expect to Earn Less?
Yes. You can make a claim to reduce your Self Assessment payments on account if you expect your tax liability to be lower than the previous year.
What the law says
Payments on account under TMA 1970 s.59A are due on 31 January and 31 July of the relevant tax year, calculated by reference to the tax liability for the preceding year.
Where a taxpayer's circumstances change significantly from one year to the next, they can make a claim to reduce or cancel the payments on account.
A penalty can be charged under s.59A(6) where a taxpayer fraudulently or negligently makes an incorrect statement in connection with such a claim. The maximum penalty is the difference between what would have been paid but for the incorrect statement and what was actually paid.
HMRC guidance / practice
When can you claim?
A claim to reduce is available where the taxpayer believes:
- The expected liability (income tax and Class 4 NICs, after deducting tax paid at source) will be less than the amount calculated using the standard payments on account rules; or
- There will be no SA liability, or any such liability will be fully covered by tax deducted at source.
The expected liability must take into account all income sources, including any giving rise to higher rate tax — not just the income that has fallen.
How to claim: A claim can be made by the taxpayer or by an agent on their behalf. Once made, HMRC will deal with it as soon as possible.
What happens if the claim turns out to be too large?
If your actual liability is higher than estimated, interest will be charged on the amount by which payments on account were underpaid. If you realise your claim was excessive, you should submit a claim to increase the payments on account to minimise interest and avoid penalty risk.
Penalties in practice: A penalty is not sought where the taxpayer acted in good faith. HMRC's intention is to prevent gross or persistent abuse — if the taxpayer makes an accurate self-assessment, no actual tax loss results (payment is merely deferred, with interest charged).
In summary: Yes, you can reduce your payments on account by making a claim if you genuinely expect a lower tax liability. However, estimate carefully — if you reduce by too much, HMRC will charge interest on the shortfall, and persistent or fraudulent overclaiming can attract a penalty.
Citation sources
Taxpayers can make a claim to reduce or increase the payments on account that they expect to pay. A claim can also be made by an agent on behalf of the taxpayer. A claim to adjust payments on account is made where the taxpayer believes The expected liability under SA, after deducting tax paid at source, but including any higher rate liability, will be less than that determined using the rules for calculating payments on account (see SAM1100), or There will be no SA liability or that any such lia
Henrietta also had a liability of £22,000 for 2011-12, but made a claim to reduce her total ITSA payments on account from £22,000 to £20,000 because she expected her income tax liability for 2012-13 to be £2,000 less than for 2011-12. She then self-assessed her 2012-13 income tax liability at £25,000, so her balancing payment was £5,000 and the claim to reduce was therefore excessive. Henrietta paid each ITSA payment on account of £10,000 and the balancing payment of £5,000 on their due dates. A
Payments on account under TMA70/S59A for any tax year are due on 31 January of that tax year and 31 July next following that tax year, subject to de minimis limits and are calculated by reference to the tax liability for the preceding year. Where a taxpayer’s circumstances change significantly from one year to the next, they can make a claim to reduce or cancel the payments on account. The revised payments should reflect the taxpayer’s views on what payment on account, if any, are due for the cu
Balancing charge debit and payments on account due: My tax calculation shows total tax due of £[XXXX.XX] for [Year]. This is due as follows £[POA 1] due by 31 January [Year] £[POA 2] due by 31 July [Year] £[Balancing charge debit] due by 31 January [Year] Balancing charge debit only: Based upon my tax calculation your payment due for [Year] is £[Balancing charge debit] due by 31 January [Year] Payments on account only: Based upon my calculation your payments due for [Year] are £[POA 1] due by 31
In Example: Calculation of payments on account above payments on account for 2004-05 were calculated as: 31 January 2005: £3,202.50 + £325 31 July 2005: £3,202.50 + £325 It might be that in 2004-05 the taxpayer has more tax deducted at source than was the case in 2003-04. For example, if a higher proportion of all work carried out is subject to CIS25 deductions the payments on account of income tax could be recalculated as follows: Gross income tax assessed for 2003-04: £8,500 Credits on dividen
After claiming to reduce payments on account a taxpayer or agent may realise the claim was excessive. A claim to increase the payments on account may then follow. A taxpayer may pay an extra amount in an attempt to stop interest accruing without making a claim to increase payments on account. Without a claim to increase payments on account, it is likely that the extra amount will be allocated to another unpaid liability. In this situation, any interest charge raised on the payment(s) on account