If your Self-Assessment required payments on account, the second instalment fell due on 31 July 2025. If it was not paid, HMRC charges late payment interest from 1 August until the amount is cleared. A late payment penalty can also arise if the tax remains unpaid 30 days after the deadline, with further penalties at six and twelve months. Interest runs daily, so every part payment helps to reduce the running cost.
Pay now, or as much as you can
The simplest way to limit charges is to pay the outstanding amount as soon as possible. Bank transfer and debit card are quickest. If you cannot clear the full balance, making a part payment will reduce the daily interest. Keep a record of payment references and screenshots in case you need to evidence the date funds left your account.
Reduce the payment on account if your income fell
If your profits or untaxed income for 2024-25 will be lower than the previous year, you can ask HMRC to reduce your payments on account. This is normally done through your online account or by filing form SA303. Be realistic with your estimate. If you reduce too far, HMRC will charge interest on the shortfall from the original due date and may consider penalties if the claim was not made on a reasonable basis.
Set up Time to Pay if cash is tight
Where affordability is the issue, contact HMRC to arrange a Time to Pay plan. Agreeing terms upfront usually stops late payment penalties from escalating, although interest will continue to accrue until the balance is cleared. Propose a sensible monthly figure, be ready with basic financial information, and keep to the plan once agreed. If circumstances change, speak to HMRC before you miss an instalment.
File the return early to remove uncertainty
Submitting your 2024-25 return early will confirm the actual liability. That may lead to a refund if payments on account were too high, or it will crystallise the balancing payment due by 31 January 2026 so you can plan. Early filing also allows you to set accurate payments on account for 2025-26.
Key actions
- Log in to your HMRC online account to confirm what is outstanding.
- Pay the amount due immediately or pay what you can to cut daily interest.
- If your income is genuinely lower, submit a claim to reduce the payment on account.
- If you cannot pay in full, agree a Time to Pay arrangement with HMRC.
- File your 2024 to 2025 return as soon as practical to fix the final numbers and avoid surprises.
- Set up a Budget Payment Plan for the year ahead to smooth cash flow.