Self Assessment Balancing Payment Explained
When you file your Self Assessment return, HMRC calculates whether the tax you have already paid (through payments on account and PAYE) covers your actual liability. The difference is your balancing payment.
How It Works
Your balancing payment = Total tax due minus tax already paid (payments on account + PAYE deductions).
If you owe more: You make a balancing payment to cover the shortfall. Due by 31 January.
If you have overpaid: HMRC refunds the difference or applies it to next year's account.
Example
Tax liability for 2026/27: £8,000 Payments on account already made: £6,000 (two payments of £3,000) Balancing payment due: £2,000
But on the same 31 January, you also pay the first payment on account for 2027/28 — typically £4,000 (half of £8,000). So your total January bill is £6,000.
Minimising the Shock
The January bill can be large because it combines the balancing payment with the first payment on account. Budget for this throughout the year. Accounted shows your estimated balancing payment well in advance.
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Tax & Compliance Specialists
Our tax specialists have decades of combined experience in UK sole trader and small business taxation, MTD compliance, and HMRC submissions. All content is reviewed against current HMRC guidance before publication and updated quarterly to reflect legislative changes.
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