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As the holiday season fades, millions of freelancers, sole traders, and landlords brace themselves for the most stressful day in the financial calendar: 31 January. This is the deadline for filing your Self Assessment tax return and paying HMRC.
But the real stress isn't the paperwork—it's the calculation. Due to the UK's archaic Payment on Account (POA) system, the amount you owe on 31 January is rarely just the tax for the year you're filing. It is a confusing amalgamation of past debts and future advances.
Here is a breakdown of exactly what is due on 31 January 2027, how to calculate your balancing payment, and what to do if you simply can't afford the bill.
What's Due on 31 January 2027? (Most People Get This Wrong)
When you log into HMRC to pay your bill on 31 January 2027, the total figure you see is made up of two distinct charges:
- Your 2025/26 Balancing Payment: This settles the final tax bill for the tax year that ended on 5 April 2026.
- Your 2026/27 First Payment on Account: This is a 50% advance payment towards the tax year you are currently living in (which ends on 5 April 2027).
Because you are paying for both the past and the future on the same day, January is overwhelmingly the most expensive month for anyone in Self Assessment.
How to Work Out Your Balancing Payment
Your balancing payment is not your total tax bill for the year. It is your total tax bill minus any Payments on Account you already made last year.
For example, if your total tax bill for 2025/26 is £5,000, but you already paid two POA instalments of £2,000 each (in Jan 2026 and July 2026), your balancing payment is just £1,000. You have already paid off £4,000 of the debt.
How to Work Out Your First Payment on Account
HMRC calculates your First POA for 2026/27 by looking at your final 2025/26 bill and dividing it by two. So, if your 2025/26 bill was £5,000, your First POA will be £2,500.
Total Due in Jan 2027: £1,000 (Balancing Payment) + £2,500 (First POA) = £3,500.
What If You Can't Afford to Pay?
If you look at the January total and realize you don't have the cash, do not ignore it. HMRC's computer system automatically issues penalties on 1 February.
Time to Pay Arrangements With HMRC
If your tax bill is under £30,000, you have filed your return, and you have no other outstanding debts to HMRC, you can set up a "Time to Pay" arrangement online without speaking to a human. This allows you to split the bill into manageable monthly direct debits over up to 12 months.
You will still be charged interest on the outstanding balance, but setting up a plan prevents the severe late-payment penalties from kicking in.
Late Payment Penalties — What They Cost You
Failing to pay by 31 January triggers immediate consequences:
- Interest: Accrues daily from 1 February at the Bank of England base rate plus 2.5%.
- 30 Days Late (3 March): A 5% penalty is slapped onto the unpaid tax.
- 6 Months Late: Another 5% penalty is added.
- 12 Months Late: A final 5% penalty is added.
Frequently Asked Questions
What is the difference between a payment on account and a balancing payment?
Your balancing payment settles the difference between what you already paid (via POA) and what you actually owed for the previous tax year. Your payment on account is a 50% advance towards the next year's expected bill. Both are due on 31 January.
What happens if I can't pay my SA bill on 31 January?
Contact HMRC before the deadline to set up a Time to Pay arrangement. If your bill is under £30,000, you can do this online. You'll still owe interest on any late payment, but penalties can be avoided if you arrange to pay in instalments.
Does the 31 January deadline include National Insurance?
For Self Assessment filers, Class 4 NI is calculated and collected as part of your SA return. It's included in the amounts shown on your SA statement and due by 31 January.
🔢 Know your exact January bill before it arrives.
Our Payment on Account Calculator works out your balancing payment and both POA amounts with key dates.