How to Reduce Self Assessment Payments on Account (SA303)
Tax bill lower than last year? Apply to reduce your Self Assessment payments on account using SA303 — eligibility, the online process, deadlines, and risks.
Key Actions
- Check your latest Self Assessment statement for the current payments on account amounts
- Estimate your 2025/26 profit before the 31 July 2026 second payment is due
- Apply through your HMRC online account or post a paper SA303 form
- File the claim by 31 January 2027 for the 2025/26 tax year
- Keep evidence of why your income dropped (in case HMRC reviews the claim)
If you know your self-employed income will be lower this tax year than last, you can ask HMRC to reduce your Self Assessment payments on account. The route is a claim called SA303 — submitted online through your HMRC account or as a paper form. Both versions do the same thing: lower the advance amount HMRC will take in January and July.
This matters most for self-employed people whose 2025/26 income is tracking below 2024/25. Without action, HMRC will collect two payments based on the higher year. A correctly-sized SA303 claim keeps your cash where it belongs — but a claim that's too low triggers interest on the difference. This guide covers when to claim, how to apply, and the trade-offs to weigh.
What Are Payments on Account?
Payments on account are advance payments towards your next Self Assessment tax bill. If your last tax bill was £1,000 or more (and less than 80% was collected through PAYE), HMRC asks for two instalments of 50% each — one due 31 January, one due 31 July.
For more on how the system works and how the balancing payment closes out the year, see payments on account explained. This guide focuses on what to do when the advance HMRC asks for is more than you'll actually owe.
When You Can Reduce Payments on Account
You can submit an SA303 claim whenever you have a reasonable basis to expect your tax bill for the current year will be lower than last year's. Common reasons:
- Income has dropped — fewer clients, lower rates, a quieter market, or a career change
- You've stopped or paused trading — reduced hours, switched to part-time, or moved to employment
- Allowable expenses have risen — new equipment, higher mileage, business growth costs
- You've made pension contributions — these reduce your taxable income
- A one-off boost in 2024/25 won't repeat — a single large contract, bonus, or asset sale
HMRC doesn't require formal evidence to accept the claim, but you should be able to justify the estimate if asked later. Keep notes on what changed and rough figures supporting the lower forecast.
When You Can't (or Shouldn't) Reduce
- You're guessing without a reason — speculative reductions invite interest charges
- Your income is the same or higher — there's no claim to make
- You owed less than £1,000 last year — you don't make payments on account at all
- You've filed for a Time to Pay arrangement — affordability is separate from this claim; use Time to Pay instead
How to Apply Online
The online route is the fastest. You'll need a Government Gateway login linked to Self Assessment.
- Sign in to your HMRC online account
- Open Self Assessment
- Select "Reduce payments on account"
- Enter your estimated total tax bill for the current year (not the reduction figure — the full new amount you expect to owe)
- Submit
HMRC recalculates both payments on account at 50% of your estimate. The change usually shows on your statement within a few working days. Both the next instalment and any future instalments for the same tax year are adjusted from one claim — you don't need to apply separately for January and July.
How to Apply by Post (Form SA303)
The paper SA303 form is available on GOV.UK. Download it, fill in:
- Your Unique Taxpayer Reference (UTR)
- The tax year the claim covers
- Your reduced estimate
- A short reason for the reduction
Send it to the HMRC tax office address shown on your most recent Self Assessment statement. Paper claims take longer to process — allow several weeks. The online route is the better choice if the next deadline is close.
The Deadline: 31 January
A reduction claim must be made by 31 January following the end of the tax year. For 2025/26 payments on account, that's 31 January 2027 — the same deadline as filing the 2025/26 tax return.
In practice, the useful window is much earlier. To benefit from a lower 31 July 2026 second payment, the claim needs to be processed before that date. Online claims submitted by mid-July are typically reflected in time.
The Risk: Reducing Too Much
This is the catch. If your reduction turns out to be too generous and you actually owe more, HMRC charges interest on the difference between what you should have paid on each due date and what you actually paid.
Late payment interest is 7.75% (rate from 9 January 2026), set at the Bank of England base rate plus 4%. Interest runs from each payment due date until the underpaid amount is settled.
There's no penalty for an honest underestimate — only interest. But the interest can mount up over a year, and the difference is then due as part of the balancing payment in January.
A rough rule: if your estimate turns out to be £2,000 too low (£1,000 missed on each instalment), the interest exposure by the following 31 January is around £115 — £77 on the January-due shortfall and £39 on the July-due shortfall. That's the cost of reducing too aggressively.
Worked Example: Sarah's 2025/26 Year
Sarah is a self-employed graphic designer. Her 2024/25 tax bill was £8,400, so HMRC has asked for:
- £4,200 on 31 January 2026 (already paid)
- £4,200 on 31 July 2026 (upcoming)
By June 2026, Sarah's income is tracking around 30% lower than last year — a major retainer client ended, and she's expanding her studio (higher allowable expenses). She estimates her 2025/26 tax will be around £6,000.
She submits an online SA303 claim with an estimate of £6,000. HMRC recalculates:
| Payment | Original | Reduced |
|---|---|---|
| 31 January 2026 (already paid) | £4,200 | £3,000 |
| 31 July 2026 | £4,200 | £3,000 |
Because the first payment was already made at the original amount, the overpayment of £1,200 is credited against the second payment. Sarah's July payment becomes £1,800 (£3,000 − £1,200 credit).
If Sarah was wrong and her actual 2025/26 tax turns out to be £7,500, the £1,500 shortfall (£750 per payment) would attract 7.75% interest from each due date until paid as part of the balancing payment on 31 January 2027 — roughly £87 across both instalments (£58 on the January shortfall and £29 on the July one). Not catastrophic, but a real cost. If she'd left the original amounts in place, no interest would apply.
When to Apply
Three reasonable points to file a claim:
- Around the time of filing — if you're filing your prior-year return in December and you can already see the current year is lower
- Before 31 July — to lower the second payment on account (most common case)
- As soon as a clear drop appears — closing a major contract, illness, switching to employment, retiring
You can amend a previous claim if circumstances change again. Make a new claim with the updated estimate using the same online process or a fresh SA303.
Frequently Asked Questions
Can I reduce my payments on account before filing my tax return?
Yes. You don't need to have filed the relevant year's return to submit a reduction claim — you only need a reasonable estimate of what the tax will be. Many self-employed people apply during the tax year itself, as soon as they're confident income will be lower.
What's the difference between the online claim and the paper SA303 form?
Both have the same legal effect. The online claim goes through your HMRC account in a few clicks and processes within days. The paper SA303 form is for people who can't or prefer not to use the online route — but it's slower to process and the next deadline may pass before HMRC acts on it.
What happens if I reduce my payments and my income then recovers?
You can submit a new claim with a revised (higher) estimate, or make a voluntary additional payment to close the gap. If you do nothing and your actual tax exceeds what you paid, the shortfall is charged 7.75% interest from each original due date and is collected with the balancing payment.
Will HMRC ask for proof of my reduced income?
Not at the point of claim. HMRC accepts the figure you submit. If your actual tax return later shows the estimate was unrealistic, the difference attracts interest — but no separate evidence is required upfront.
Can I cancel a payment on account altogether?
Yes — if you reasonably expect to owe less than £1,000 for the current year. Submit a claim with that estimate. HMRC will cancel both payments. Be careful: a small misjudgement can flip you back into payments-on-account territory plus interest.
Does reducing payments on account affect my Class 2 or Class 4 NI?
Payments on account cover the full Self Assessment liability, including Class 4 National Insurance and any Class 2 NI due. Reducing the payments lowers all components proportionally based on your estimate. From April 2024, Class 2 NI is treated as paid automatically if your profits exceed the Small Profits Threshold (£6,845 for 2025/26).
What if I'm self-employed and a landlord — does one claim cover both?
Yes. Payments on account are based on your total Self Assessment liability, so a single estimate covers all your income streams. If your self-employed work has dropped but rental income is steady, base your estimate on the combined picture.
This guide is for informational purposes only and does not constitute tax, legal, or financial advice. Tax rules change frequently. Always verify current requirements on GOV.UK or consult a qualified accountant for your specific situation.