Reducing self-assessment payments on account letter

If you’re in the self-assessment system you might be required to make payments on account of each year’s tax liability.  However, where you expect your tax liability to be lower than the payments on account you can write to HMRC to ask for them to be reduced.

Claim

HMRC automatically calculates each payment on account (POA) as 50% of the net tax bill for previous year, on the assumption that for the current one you’ll owe at least the same amount. If, however, you expect your tax to be lower, say because your income has fallen, you can apply to reduce the POAs and replace HMRC’s figures with your estimate. POAs are usually payable in equal instalments on 31 January and 31 July.

You can include an application to reduce POAs when you complete your return for the previous year, or at any time before the normal deadline for submitting the tax return for the year to which the POAs relate. For example, you can apply to reduce the POAs for 2023/24 at any time before 31 January 2025. However, because the second POA is due on 31 July 2024 you’ll probably want to do it a lot sooner.

In the latter case you can ask for your POAs to be reduced using HMRC’s online services or over the phone. Alternatively, you can send a letter to your tax office instead. You’ll find the address on the front page on your tax return notification.

How to use

Use our Reducing Payments on Account Letter to request a reduction in POAs by adding your personal details, name, address etc., and specifying the amount you wish each payment to be reduced to (payments on account must be equal so if you estimate your tax bill for the year to be £2,000, each POA will be £1,000). You also need to give a reason, so choose from the list we’ve provided and delete any that aren’t relevant.

As a word of warning, if you reduce your POAs to less than your actual tax liability, you will be charged interest on the difference between the amount you pay and the POAs originally calculated by HMRC - so make the estimate of your tax liability as accurate as possible.