If you’re a sole trader, freelancer, or small business owner who pays tax through Self Assessment, HMRC’s second payment on account for the 2025/26 tax year falls due on 31 July 2026 — just over two weeks away. It’s one of those deadlines that’s easy to lose track of, sitting quietly between the January filing rush and the following January’s return, with no big campaign or reminder letter to jolt anyone into action.

Payments on account are advance instalments toward next year’s tax bill, based on what you owed the previous year — half paid by 31 January, the other half by 31 July. If your income has dropped since last year, you may be paying more than you actually need to right now. If it’s risen, you could be underpaying and facing a larger bill in January. Either way, this is the one moment in the tax year built specifically for a quick gut-check.

Why this deadline catches people out

Unlike the January deadline, which comes with a return to file and a natural prompt to look at the numbers, the July payment is just… due. There’s no form to complete, no fresh calculation forced on you — HMRC simply expects the same amount as your January payment, calculated from last year’s figures. That makes it very easy to either forget entirely, or to pay it on autopilot without checking whether the number still makes sense for how the business has actually performed this year.

Miss it, and HMRC starts charging interest from 1 August, currently running well above base rate. It’s not usually a catastrophic amount for a short delay, but it’s an entirely avoidable cost, and persistent late payment can eventually trigger closer HMRC scrutiny of a business’s affairs generally.

What to check before 31 July

If your profits this year are noticeably lower than last year — a slow patch, a big client lost, a seasonal dip — you can apply to HMRC to reduce your payment on account rather than paying the full amount and waiting for a refund later. This is done through your Self Assessment account or via your accountant, and it’s a legitimate, routine adjustment rather than anything that raises flags. Conversely, if trading has been stronger, it’s worth setting aside a bit extra now rather than being caught out by a bigger-than-expected bill next January.

Either way, the ten minutes it takes to pull up last year’s payment reference and check it against this year’s actual trading position is time well spent. If cash flow is tight, HMRC does offer Time to Pay arrangements — but that’s a conversation worth having before the deadline passes, not after the interest has already started.

A wider habit worth building

Payments on account are a good excuse for a slightly bigger exercise most small business owners don’t do often enough: a mid-year check on whether the business is actually tracking the way you assumed it would when you last did your books properly. Six months in, is turnover ahead of or behind where you expected? Are costs — supplies, wages, rent — moving in line with plans, or has something crept up unnoticed? A payment on account calculated from last year’s figures is, in effect, a snapshot of an assumption, and assumptions are worth testing at least twice a year rather than once.

This doesn’t need to be a formal review with an accountant, though it’s worth one if the numbers have moved a lot. Even an hour spent comparing this year’s bank statements against last year’s for the same months will usually tell you whether the July payment figure still makes sense, or whether it’s time to have that conversation with HMRC about adjusting it.

The takeaway

Put 31 July in the diary now if it isn’t already there, and use the run-up to check whether the amount HMRC expects still matches how the business has actually traded this year. A five-minute review now is considerably cheaper than interest charges or a scramble in January.