If you file a self assessment tax return, you will have to make a Payment on Account (POA). This applied if you have tax to pay of over £1,000, and you haven’t already paid 80% or more of your total tax liability through PAYE.
Each payment on account is half (50%) of your previous tax year’s tax bill and are due by midnight on 31st January and 31st July.
If, after filing your Self Assessment Tax Return, you still have tax to pay in addition to your payments on account, you will have to make a balancing payment by the following 31st January.
You can apply to reduce your Payments on Account if you expect your profits to decrease significantly, however if, when you file your Self Assessment, it transpires that you should have paid the original amounts, you will be charged interest on the unpaid amounts.
Example: Your tax bill for the 2019-2020 tax year is £3,000. You have not paid any payments on account until now. You will have to pay £4,500 by 31st January 2021 (made up of £3,000 for the 19-20 tax year, and a first POA for the 20-21 tax year of £1,500) and a second POA by 31st July 2021 of £1,500.