How to Reduce Your Payments on Account (Form SA303)

If you know your tax bill for this year will be lower than last year's, you can ask HMRC to reduce your payments on account. You do it online through your HMRC account, or by post using form SA303, and you must give a reason. The catch is that if you cut them too far, HMRC charges interest on the shortfall. This guide explains when a reduction makes sense, how to work out a sensible figure, and how to make the claim.

Key takeaways

• You can claim a reduction when you expect this year's Self Assessment bill to be lower than last year's.
• Claim online by selecting "Reduce payments on account", or by post with form SA303.
• Reduce too much and HMRC charges interest on the difference, and can charge a penalty if the claim was careless or deliberately wrong.
• For 2026/27, the payments are due on 31 January 2027 and 31 July 2027, and you can claim a reduction up to 31 January 2028.
• Base the new figure on a real estimate, not on hope.

What are payments on account?

Payments on account are two advance payments towards your next Self Assessment bill. Each one is normally half of your previous year's bill, and they are due by midnight on 31 January and 31 July. You have to make them unless your last bill was less than £1,000, or more than 80% of the tax you owed was already deducted at source, for example through your tax code.

They cover Income Tax and, if you are self-employed, Class 4 National Insurance. They do not include Capital Gains Tax or student loan repayments, which are settled in the balancing payment. Our guide to payments on account covers the basics in full, and HMRC's own explanation is on the GOV.UK page about payments on account.

Why you might want to reduce them

HMRC assumes this year will look like last year. For the 2026/27 tax year, your payments on account are based on your 2025/26 bill. If your circumstances have changed, you can end up paying far more in advance than you will actually owe.

HMRC accepts a claim where:

• Your profits or other income have gone down. A quieter year, a lost contract, fewer hours on the road, or a rental property that has been sold or stood empty.
• You have stopped self-employment or moved into a job where tax is taken through PAYE.
• Your tax reliefs have gone up, for example because you are making larger pension contributions.
• More tax is being deducted at source than in the previous year.

Wanting to keep hold of the cash for longer is not a reason. Neither is struggling to pay. If the bill is right but you cannot afford it, the answer is to talk to HMRC about paying in instalments. See the GOV.UK page if you cannot pay your tax bill on time.

Leave them alone or reduce them?

How to work out the new figure

The claim asks for a figure and a reason, which makes it tempting to guess low. Resist that. The figure you enter should come from an actual estimate of the year's tax:

• Add up your income and expenses for the year so far from your records.
• Project the remaining months realistically, allowing for busy periods still to come.
• Estimate the Income Tax and Class 4 National Insurance on that profit.
• Take off tax that will be deducted at source, such as PAYE on a salary or CIS deductions.
• Halve the result. That is each payment on account.

If you are unsure, round up rather than down. A small overpayment comes back to you. A shortfall costs interest. HMRC publishes its current interest rates for late payments on GOV.UK, so check the current figure there.

Step by step: making the claim

1. Check what HMRC is asking for. Sign in to your online account, view your latest Self Assessment return and select "View statements".
2. Prepare your estimate using the method above, and keep your workings.
3. Claim online. In the same part of your account, select "Reduce payments on account", enter the reduced amount and choose your reason.
4. Or claim by post. Fill in form SA303 on screen, print it and post it. You will need your Unique Taxpayer Reference and the HMRC office details from the top of your statement. The form cannot be saved part way through.
5. Pay the reduced amounts on time. The due dates do not change. See our guide to Self Assessment payment methods and deadlines.
6. Review before July. If the year is going better than expected, pay more towards the bill so the shortfall and the interest stay small.

You can make a claim at any time up to 31 January after the tax year ends.

Worked example (illustrative)

"Dalia", an illustrative example, was a full-time self-employed courier in 2025/26 and her Self Assessment bill for that year was £6,000. HMRC therefore sets her payments on account for 2026/27 at £3,000 each, due on 31 January 2027 and 31 July 2027.

In June 2026 she took a salaried job with tax deducted through PAYE and now only delivers at weekends. Using her records to date, she estimates her 2026/27 Self Assessment bill at £2,000. In October 2026 she claims online to reduce each payment on account to £1,000, giving the reason that her business profits have gone down. She pays £1,000 in January and £1,000 in July, instead of £3,000 each time.

Suppose her final bill is in fact £2,600. Each payment should have been £1,300, so she underpaid by £300 on each date. HMRC charges interest on each £300 from its due date, and she pays the remaining £600 as a balancing payment by 31 January 2028. Had she left the payments untouched, she would have paid £6,000 in advance and waited for £3,400 to be repaid.

Dalia and her figures are invented for illustration and are not a real client.

Common mistakes

• Guessing low to help cash flow. The tax is still due and the interest is added on top.
• Forgetting the second half of the year. A slow spring does not mean a slow winter, especially in seasonal work.
• Ignoring other income. Rent, dividends and savings interest all feed into the bill the payments are meant to cover.
• Leaving the return until the last week. Filing early tells you the real figure sooner. If you are behind, our guide to catching up on Self Assessment explains where to start.

How we can help

We prepare Self Assessment returns, estimate the current year's tax from your records and make the claim to reduce payments on account where the numbers support it. Personal tax returns start from £180 per year on a fixed fee. See our personal tax service, view our pricing, or contact us before the 31 January 2027 payment falls due.