You can ask HMRC to reduce payments on account if a supported estimate shows a lower relevant liability. Keep the calculation and revisit it when income changes. If you reduce the payments too far, interest can be charged on the shortfall.
When a reduction claim makes sense
GOV.UK’s claim guidance says you can apply to reduce the amounts you have been asked to pay if:
- your business profits or other income goes down
- the tax relief you are entitled to goes up
- tax deducted at source is more than in the previous tax year
In plain terms: you need a realistic reason to expect this year’s Self Assessment liability to be lower than the figure HMRC used when it set the two instalments (usually half of last year’s tax, due by midnight on 31 January and 31 July).
How to claim
You can reduce payments on account:
- Online in your HMRC account (GOV.UK’s payments-on-account page lists the “Reduce payments on account” path after you open your latest Self Assessment return), or
- By post using form SA303, printed and sent to HMRC
You will need to give HMRC the amount you expect to make so it can recalculate the instalments. For a postal claim, GOV.UK also asks for the name and address of your HMRC office (from the top of your statement) and either your Self Assessment Unique Taxpayer Reference or an employer reference.
GOV.UK’s claim page says you must claim by 31 January after the end of the tax year. Its worked example is: claim by 31 January 2025 for the year 2023 to 2024. Check the live guidance for the year you are adjusting before you leave it late.
Interest risk if you cut them too far
If you reduce payments on account and the final bill is higher than expected, GOV.UK says you can be charged interest on the difference. That is why casual “I’ll just set them to zero” reductions are a bad idea. Use a careful estimate of the tax you expect to owe, not a hopeful guess.
Illustrative only: last year’s Self Assessment tax was £8,000, so instalments were set at £4,000 and £4,000. Mid-year your trade clearly looks closer to a £5,000 bill. Asking HMRC to reduce each instalment toward £2,500 can ease cashflow. If the year later settles at £7,000 instead, interest can apply on the underpaid advance amount. The numbers are examples, not advice for your return.
Do not confuse this with a payment plan
Reducing payments on account changes how much HMRC asks for in advance. It is not the same as a Time to Pay arrangement or Budget Payment Plan if you cannot pay a bill that is already due. Those options sit in I cannot pay my Self Assessment tax bill.
Getting the estimate right
A reduction claim is only as good as the forecast behind it. Pull year-to-date sales, rental statements, CIS deductions, payroll figures and known reliefs before you submit a number to HMRC. If an accountant prepares your return, ask them to sense-check the estimate rather than filing a reduction blind.
TaxSimba’s Self Assessment service can help prepare the return that feeds these figures. We do not guarantee HMRC will accept a particular reduction amount, and we do not promise you will avoid interest if the estimate is wrong. Re-check the current GOV.UK claim page before you submit.
Revisit the forecast when work returns
Illustrative preparation example.
You forecast lower profits after losing a client, then obtain a replacement contract. Update the estimate supporting any reduction in payments on account. Keep the assumptions and dates so the claim reflects the latest position rather than an outdated cash worry.
Check: Does the revised estimate include the replacement income and other relevant changes?
| Check | Practical action |
|---|---|
| Is the expected tax liability genuinely lower? | Forecast the full relevant tax position rather than reducing instalments solely because cash is short. |
| What evidence supports the forecast? | Keep year-to-date figures, committed work, costs and tax-deducted records. |
| Has the outlook changed after the claim? | Review the estimate and correct an excessive reduction before the final calculation surprises you. |
Can I reduce instalments to zero?
Only if a supported liability estimate justifies it. Reducing too far can lead to interest on the difference.
Will a lower turnover always mean lower payments?
No. Profit margins, other taxable income, reliefs and tax deducted elsewhere can change the result. Estimate the liability as a whole.
Download a checklist for this guide
- Record the current instalments and tax year.
- Prepare year-to-date income and cost totals.
- Forecast remaining income, reliefs and tax deductions.
- Keep the calculation supporting the requested reduction.
- Set a review date after new work or income changes.