Reducing self-assessment payments on account

Self-assessment taxpayers are usually required to pay their income tax liabilities in three instalments each year. The first two payments are due on:

• 31 January during the tax year e.g., for 2022-23 the first payment on account was due on 31 January 2023.
• 31 July following the tax year e.g., for 2022-23 the second payment on account was due on 31 July 2023.

These payments on account are based on 50% of the previous year’s net income tax liability. In addition, the third (or only) payment of tax will be due on 31 January following the end of the tax year. There is no requirement to make payments on account where your net Income Tax liability for the previous tax year is less than £1,000 or if more than 80% of that year’s tax liability has been collected at source. The payments are based on 50% of your previous year’s net income tax liability. If you think that your income for the next tax year will be lower than the previous tax year, you can apply to have your payment on account reduced. This can be done using HMRC’s online service or by completing form SA303. HMRC’s internal manuals are clear that a reason for requesting a reduction in the payments on account must be given. A request without a reason is not a valid claim. There are no restrictions on the number of claims to adjust payments on account a taxpayer or agent can make. However, there is a time limit which means that the claim must be received before the 31 January following the tax year in question, for example by 31 January 2024 for the year 2022-23. There is no requirement to notify HMRC if your taxable profits have increased year on year. Self Assessment: claim to reduce payments on account (SA303) Use the online service or postal form to apply to reduce your Self Assessment payments on account. From: HM Revenue & Customs Published 11 July 2014 Last updated 30 November 2015 — See all updates Apply online (sign in using Government Gateway) http://www.tax.service.gov.uk/digital-forms/form/Self-Assessment-claim-to-reduce-payments-on-account/draft/guide Apply by post (use this version if you’re an agent or if you can’t use the online form) Ref: SA303 https://public-online.hmrc.gov.uk/lc/content/xfaforms/profiles/forms.html?contentRoot=repository:///Applications/SA_iForms/1.0/SA303&template=SA303.xdp Details You can apply to reduce the amounts you’ve been asked to pay if:

• your business profits or other income goes down
• the tax relief you are entitled to goes up

You can:

• use the online service
• fill in the postal form on-screen, print and post it to HMRC

To use the online service, you need a Government Gateway user ID and password. If you do not have a user ID you can create one when you use the service. You must claim by 31 January after the end of the tax year – for example by 31 January 2017 for the year 2015 to 2016. Appeal a penalty Appeal a penalty using the online form or read guidance on how to appeal. If you’re using an older browser, for example Internet Explorer 8, you’ll need to update it or use a different browser. Find out more about browsers. Related forms and guidance Understand your Self Assessment tax bill Details on when and why you have to make payments on account for Self Assessment.