Why January is bigger than the bill.

The payments calculator uses the same rules, and one of its buttons loads the GOV.UK example below. The dates it prints follow the tax year you select. For a 2025/26 bill that is 31 January 2027 and 31 July 2027. For 2026/27 it is a year later.

The relevant amount

Start with Income Tax and Class 4 for the year. Take off tax that was deducted at source, such as CIS deductions on this self-employed income. What is left is the relevant amount. Payments on account are half of that, twice: 31 January and 31 July.

They are not due if the relevant amount is less than £1,000. They are also not due if more than 80% of the assessed Income Tax and Class 4 was deducted at source. Exactly 80% is not "more than 80%", so the payments are still due. Both limits are the ones in HMRC's legal manual SALF303 and on the public payments-on-account page. They are not republished as a fresh pair of numbers each April, which is why both tax-year files on this site carry the same tests.

HMRC's manual works an older construction-industry case to show the deduction. Income Tax assessed £8,500, Class 4 £650, tax deducted at source £1,750 plus dividend tax credits of £345. The relevant amount is £7,055, and each payment on account is £3,527.50. Dividend tax credits of that old kind are not something a sole trader types into the calculator today. The arithmetic, taking deductions off the assessed tax and then halving what remains, is the part that still matters. Capital Gains Tax in that example was ignored for the payments on account. It still had to be paid with the balancing payment.

GOV.UK's £3,000, twice

First, the year you have already been paying towards. The bill for the year is £3,000. You had paid two payments on account of £900, so £1,800. The balancing payment is £3,000 minus £1,800, which is £1,200. On the same 31 January you also pay the first payment on account towards the next year, half of £3,000, which is £1,500. January is £2,700. The second £1,500 follows on 31 July. In the published example those dates were 31 January 2025 and 31 July 2025, for a 2023/24 bill. The pounds are what you should check. The calendar dates move forward with the tax year.

Second, a first year, with nothing paid on account yet. The same £3,000 bill is due in full, plus the first £1,500 towards next year. January is £4,500, and July is another £1,500. That is the version that surprises people who have just finished their first full year over the £1,000 line.

If the year comes out exactly equal to the payments you already made, the balancing payment is zero and January is only the first payment towards the following year. If you overpaid, the difference is a credit. The published examples add a positive balancing payment to the January instalment. They do not show the credit being subtracted from the next payment, so the calculator leaves a credit on its own line and tells you to read the statement.

Reducing them, and getting it wrong

If you know the coming year will be smaller, you can ask HMRC to reduce the payments, online or on form SA303. The claim has to say what you believe the lower amount is, and why. HMRC does not refuse a properly made claim at the door. If the bill later comes in higher, interest runs on the shortfall from the original due dates. There is also a penalty where a claim is fraudulent or negligent. Getting the sums wrong in good faith is not that penalty. Inventing a collapse in your income to avoid paying is.

The calculator will not tell you the interest rate. That rate changes and it lives on its own GOV.UK page. Reducing a payment is sensible when the year really is smaller, for example because a contract ended. It is an expensive guess when you are hoping.

What this site leaves out

Student loan repayments and Capital Gains Tax can sit on the balancing payment and are not in the halves. Class 2 is not in the halves either. A job alongside the trade usually means the Personal Allowance and the bands have already been partly used, so do not feed a salary into the profit mode of the calculator and then subtract your PAYE as if it were a CIS deduction. The "tax deducted at source" box is for tax taken off this self-employed income.