Payments on Account Calculator for Dividend Tax
Each payment on account is half of last year's Self Assessment bill, due on 31 January and 31 July 1. You don't make them if that bill was under £1,000 or more than 80% of your tax was collected at source, such as through PAYE 1. A director on a £12,570 salary with £40,000 of 2025/26 dividends owes £4,031.25, so pays £6,046.87 on 31 January 2027 and £2,015.62 on 31 July 2027.
How much will I pay on 31 January 2027?
| Salary | Dividends | 2025/26 bill | Paid at source | 31 Jan 2027 | 31 Jul 2027 |
|---|---|---|---|---|---|
| £12,570 | £20,000 | £1,706.25 | 0.0% | £2,559.37 | £853.12 |
| £12,570 | £40,000 | £4,031.25 | 0.0% | £6,046.87 | £2,015.62 |
| £12,570 | £60,000 | £10,781.25 | 0.0% | £16,171.87 | £5,390.62 |
| £35,000 | £5,000 | £393.75 | 91.9% | £393.75 | £0 (bill under £1,000) |
| £60,000 | £3,000 | £843.75 | 93.1% | £843.75 | £0 (bill under £1,000) |
| £60,000 | £10,000 | £3,206.25 | 78.1% | £4,809.37 | £1,603.12 |
Look at the two £60,000 rows. With £3,000 of dividends the bill is under £1,000, so there are no payments on account. With £10,000 the bill passes £1,000 and only 78.1% of the tax was paid through PAYE, under the 80% line, so payments on account start.
Why the first January is the big one
In your first year, 31 January brings the whole of last year's bill and the first half of next year's: one and a half times the bill. From the second year, January is the balancing payment for last year plus the first payment on account for this year 2. If you expect a smaller 2026/27 bill, you can ask HMRC to reduce the payments on account; see dividend tax payment dates.
Budget 2026: the government announced more regular in-year payments towards the final bill from April 2029. It still needs legislation, and payments on account carry on as now until then.
Paying late? Penalties start 30 days after the deadline 4; the late penalty calculator works out the amounts for your dates.
Frequently asked questions
Do I have to make payments on account on dividend tax?
Yes, unless last year's Self Assessment bill was under £1,000 or more than 80% of your tax was paid outside Self Assessment, for example through PAYE. A director paid mostly in dividends usually has to.
How much is each payment on account?
Usually half of last year's Self Assessment bill. For 2026/27, they are half of your 2025/26 bill, due on 31 January 2027 and 31 July 2027.
Why is my first January bill so big?
In your first year of payments on account, the January payment is the whole of last year's bill plus the first payment on account for this year: one and a half times the bill.
Can I reduce my payments on account?
Yes, if you expect this year's bill to be lower, for example because you will take fewer dividends. You can ask HMRC to reduce them online or on form SA303. If you reduce them too far you pay interest on the difference.
Is anything changing?
Budget 2026 announced more regular in-year payments towards the final bill from April 2029. That still needs legislation; payments on account carry on as now until then.
Does the 80% test use my PAYE tax?
Yes. If more than 80% of last year's total Income Tax was collected at source, such as PAYE on your salary, you don't make payments on account, even if the Self Assessment bill was over £1,000.
How the January and July amounts are built
Payments on account are advance payments towards the next year's bill, based on the last one. Each is normally half of the previous year's Self Assessment bill (the tax not already collected at source), and they are due on 31 January in the tax year and 31 July after it. When you file, the real bill is compared with what you paid on account: you pay any shortfall as a balancing payment on 31 January, or the excess is set against what you owe or repaid.
For dividend income this matters more than for most people, because no tax is taken when a dividend is paid. A director on a small salary owes almost all their Income Tax through Self Assessment, so the 80% test, which spares people whose tax is mostly collected at source, rarely helps, and payments on account start as soon as the bill reaches £1,000.
The 2026/27 rate rise makes the second year uneven. Payments on account for 2026/27 are half of the 2025/26 bill, worked out at 8.75% and 33.75%, but the 2026/27 dividends are taxed at 10.75% and 35.75%. The difference turns up as a larger balancing payment in January 2028.
A director's next four payment dates
| Date | What it covers | Amount |
|---|---|---|
| 31 January 2027 | 2025/26 balancing payment + 1st payment on account for 2026/27 | £6,046.87 |
| 31 July 2027 | 2nd payment on account for 2026/27 | £2,015.62 |
| 31 January 2028 | 2026/27 balancing payment + 1st payment on account for 2027/28 | £3,200.63 |
| 31 July 2028 | 2nd payment on account for 2027/28 | £2,410.62 |
A director on a £12,570 salary with £40,000 of dividends in each of 2025/26 and 2026/27, and no payments on account before. Dividend tax only.
Why January 2028 is bigger than half the bill
The 2026/27 bill is £4,821.25. Payments on account made in January and July 2027 total £4,031.24, based on the 2025/26 rates, so £790.01 is left as the balancing payment. The first payment on account for 2027/28, half of £4,821.25, is added on top: £3,200.63 in all.
Reducing payments on account
If the same director expects to take only £20,000 of dividends in 2026/27, the bill would be about £2,096.25, so each payment on account could be reduced to £1,048.12. You can ask HMRC to reduce them online or on form SA303. If the final bill turns out higher, interest is charged on the difference from the original due dates, at the late payment rate (7.75% since 9 January 2026).
Every figure here is worked out by the same code as the calculator, using 2026/27 rates unless another year is named. Estimates for planning, not tax advice.
What catches people out
- Budgeting for the bill, not the cash. In the first year, 31 January asks for one and a half times the bill.
- Forgetting that the 80% test includes PAYE. An employee with dividends can avoid payments on account if more than 80% of their total tax was collected through PAYE.
- Reducing them on a hunch. Reduce only to a figure you can support: HMRC charges interest if you reduce too far, and can charge a penalty if you reduce them carelessly or deliberately.
- Assuming they include everything. Student loan repayments and Capital Gains Tax are not included in payments on account; they are paid in the balancing payment.
Sources & references
Every headline figure in this guide is drawn from the official HMRC and GOV.UK sources below and reflects the confirmed 2026/27 rates. Each link opens the relevant official page in a new tab.
- Understand your Self Assessment tax bill: payments on account ↗ https://www.gov.uk/understand-self-assessment-bill/payments-on-account
- Pay your Self Assessment tax bill — GOV.UK ↗ https://www.gov.uk/pay-self-assessment-tax-bill
- Income Tax rates and allowances for current and past years ↗ https://www.gov.uk/government/publications/rates-and-allowances-income-tax/income-tax-rates-and-allowances-current-and-past
- Self Assessment tax returns: penalties — GOV.UK ↗ https://www.gov.uk/self-assessment-tax-returns/penalties
- HMRC interest rates for late and early payments — GOV.UK ↗ https://www.gov.uk/government/publications/rates-and-allowances-hmrc-interest-rates-for-late-and-early-payments/rates-and-allowances-hmrc-interest-rates
Sources last checked: 29 October 2026.
Run your own limited company? The Director's Pay & Tax Pack 2026/27 (28-page pack, £4.99) covers salary, dividends with paperwork templates, director's loans and year-end.