Interest on Self assessment payments

Selfassessme

I have just done my tax calculation for 24/25 tax year and, after I pay the 5k second payment on account, I will still owe 2k tax and NI.
If I pay the 5k requested ( based on 23/24 tax year) will I be charged any interest on the 2k?
 and how will the interest be calculated?
Is there any advantage to paying more than the requested 5k on 31 July?
Thanks in advance

Dazed_and_C0nfused

Selfassessme said:

I have just done my tax calculation for 24/25 tax year and, after I pay the 5k second payment on account, I will still owe 2k tax and NI.
If I pay the 5k requested ( based on 23/24 tax year) will I be charged any interest on the 2k?
 and how will the interest be calculated?
Is there any advantage to paying more than the requested 5k on 31 July?
Thanks in advance

The extra £2k should be added to your Self Assessment account as a Balancing Payment payable on 31 January 2026.

A few days after you file your return you should see the updated situation showing the Balancing Payment (and POA for 2025/26 I think).

Nomunnofun1

Selfassessme said:

I have just done my tax calculation for 24/25 tax year and, after I pay the 5k second payment on account, I will still owe 2k tax and NI.
If I pay the 5k requested ( based on 23/24 tax year) will I be charged any interest on the 2k?
 and how will the interest be calculated?
Is there any advantage to paying more than the requested 5k on 31 July?
Thanks in advance

No you won’t get charged interest. The £2000 is not due until 31st January 2026. From that date interest will be charged on it. 

Selfassessme

Thanks for the clarifications.
A few years back I was charged a load of interest but I think that was because I opted to reduce the on account payments and then earned more than my estimate.
As a follow on please,
my on account payments for Jan26 and July 26 will now be 6k each based on 24/25 earnings. If I only earn 10k in 25/26, can I reduce my on account payment or do I have to wait until Jan 27 to get my 2k overpayment back?

Dazed_and_C0nfused

Selfassessme said:

Thanks for the clarifications.
A few years back I was charged a load of interest but I think that was because I opted to reduce the on account payments and then earned more than my estimate.
As a follow on please,
my on account payments for Jan26 and July 26 will now be 6k each based on 24/25 earnings. If I only earn 10k in 25/26, can I reduce my on account payment or do I have to wait until Jan 27 to get my 2k overpayment back?

You can reduce your POA if you think they are excessive.  But as you have experienced if you get that wrong there is interest charged.

Maybe reduce them but more conservatively?

Don't forget if you pay the POA and it turns out you didn't need to pay that much then HMRC credit you with some (non taxable) interest.

Nomunnofun1

Selfassessme said:

Thanks for the clarifications.
A few years back I was charged a load of interest but I think that was because I opted to reduce the on account payments and then earned more than my estimate.
As a follow on please,
my on account payments for Jan26 and July 26 will now be 6k each based on 24/25 earnings. If I only earn 10k in 25/26, can I reduce my on account payment or do I have to wait until Jan 27 to get my 2k overpayment back?

You could always file your return in advance of the 31st July 2026 payment? 

If your bill does indeed come to £10000 you could, having paid £6000 in January 2026, reduce EACH payment on account to £5000. 

You would only pay £4000 on 31st July 2026 and receive a bit of interest on the £1000 overpaid in January 2026.