Form SA303 is how you tell HMRC to lower your Self Assessment payments on account when you expect to owe less tax than last year. Payments on account are two advance instalments toward your next tax bill, each equal to half of what you owed through Self Assessment the previous year, due on 31 January and 31 July. If your income is falling, your allowable expenses are rising, or more of your tax is now being deducted at source, you can file an SA303 claim (online or on paper) to reduce both instalments to a figure that better reflects the year ahead.
How Each Instalment Is Calculated
Each payment on account is exactly half of the income tax and Class 4 National Insurance you owed through Self Assessment for the previous tax year. HMRC treats your last return as the best available estimate of what you’ll owe next year, so for someone with steady income, the two instalments will cover most of the upcoming bill.
You only have to make payments on account if two conditions are both met: your Self Assessment bill for the previous year was £1,000 or more, and less than 80% of your total tax was paid through deductions at source, such as PAYE from employment or tax withheld on savings interest. If either condition fails, you pay the whole bill in one go by 31 January and no instalments arise.
A worked example makes the arithmetic concrete. Say your 2024–25 bill comes to £3,000 and you had already paid £1,800 across two payments on account. You owe a £1,200 balancing payment to close the gap. On top of that, your first payment on account for 2025–26 is £1,500 (half of £3,000), and both amounts fall due on 31 January 2026. Your second payment on account of £1,500 is then due on 31 July 2026.
The Two Deadlines and the Balancing Payment
The UK tax year runs from 6 April to 5 April. Two fixed dates drive the cycle:
- 31 January — first payment on account for the current year, plus any balancing payment from the previous year, plus the filing deadline for the return.
- 31 July — second payment on account for the current year.
Once you file, HMRC compares what you’ve paid in instalments against your actual liability. A shortfall is your balancing payment, due by that 31 January. A surplus becomes a credit on your account. This is also the moment your next set of payments on account is recalculated: if your bill has risen from £2,000 to £4,000, the new instalments jump from £1,000 to £2,000 each. January can then get expensive, because you’re clearing the old year’s balance and paying a larger first instalment for the new year at the same time.
When You Can Reduce Payments on Account
HMRC accepts a reduction claim on three broad grounds:
- Your income has fallen — business profits or other self-assessed income is lower than last year.
- You’re entitled to more tax relief, for example through higher pension contributions.
- A greater share of your income now has tax deducted at source before it reaches you, such as taking on employed work taxed through PAYE.
The formal deadline for a reduction claim is 31 January after the end of the tax year the payments relate to. To reduce payments on account for 2025–26, you’d have to claim by 31 January 2027 at the latest. In practice you want the claim in well before the first instalment falls due, so HMRC’s records show the lower figure before you pay.
How to File an SA303 Claim
The online route is the simpler one. Sign in to your HMRC online account, go to your latest Self Assessment return, and select “Reduce payments on account.” Enter the revised amount you expect to owe for the year. HMRC updates your statement, and you can check the new figures in your account.
If you can’t use the online service, complete Form SA303 on screen through the GOV.UK website, print it, and post it to HMRC. The form can’t be saved partway through, so have your details ready before you start. You’ll need your Self Assessment Unique Taxpayer Reference (UTR) and the name and address of your HMRC office, which appear at the top of your statement. The form asks for the revised amount you believe each instalment should be.
The Risk of Reducing Too Much
Getting the estimate wrong has a cost. If you reduce your payments on account and your actual bill comes in higher than the reduced figure, HMRC charges interest on the shortfall from the date the original payment was due, not from the date you file your return. HMRC’s guidance is explicit that it will not waive interest simply because a reduction claim was made in good faith. The duty to keep your estimate realistic sits with you.
The late payment interest rate is 7.75% from 9 January 2026, tied to the Bank of England base rate plus 2.5%, and it accrues daily until you pay. Repayment interest, if HMRC ends up owing you, is 2.75% on the same date (base rate minus 1%, with a 0.5% floor). The gap between those two rates is the reason to reduce only when you have real evidence for the lower figure, not to over-reduce as a cashflow tactic.
Inaccurate claims can also attract penalties under Schedule 24 of the Finance Act 2007. A careless inaccuracy can cost up to 30% of the tax lost, a deliberate inaccuracy up to 70%, and a deliberate and concealed inaccuracy up to 100%. Voluntary disclosure before HMRC opens an enquiry can reduce those percentages significantly, and in some careless cases to nothing at all.
What’s Not Included in Payments on Account
Two items on a Self Assessment bill sit outside the instalment system, and they trip people up because you can’t spread them across the two payments even if you wanted to:
- Capital gains tax is paid as part of the balancing payment, not through payments on account. A large CGT bill from selling an investment or second property falls due in full on 31 January.
- Student loan repayments collected through Self Assessment are also excluded. The full amount is due by 31 January after the tax year ends, and you don’t factor student loan repayments into a claim to reduce payments on account.
Because these amounts sit outside the instalments, the 31 January total can be substantially larger than a straight doubling of the last payment on account would suggest.
If You’ve Overpaid
When your two payments on account exceed your actual liability, the surplus shows up as a credit on your Self Assessment account and HMRC adjusts the account automatically. There’s one exception worth knowing: if another tax payment is due within 45 days, such as the next payment on account, HMRC will offset the credit against that upcoming bill rather than sending the money back. If nothing is due, you can request the refund from your account.