Balancing Payments

Your balancing payment settles the difference between what you owe in tax and what you've already paid. This article explains how balancing payments work and when they're due.

What a balancing payment is

A balancing payment is the final amount you owe (or are owed) after HMRC calculates your actual tax liability for the year and deducts any payments you've already made.

The calculation is:

Balancing payment = Total tax owed − Payments already made

Payments already made include:

• Payments on account for the tax year
• Tax deducted through PAYE (if you have employment income)
• Tax deducted at source from other income

If the result is positive, you owe a balancing payment. If it's negative, you've overpaid and HMRC will refund you.

How balancing payments are calculated

After you submit your final declaration, HMRC generates a tax calculation showing:

1. Your total Income Tax liability for the year
2. Any payments on account you made during and after the tax year
3. Any other tax paid through PAYE or deducted at source
4. The balancing payment (the difference)

Example: Income stays the same

Your tax bill for 2024/25 was £6,000. You made two payments on account totalling £6,000 (£3,000 in January 2025, £3,000 in July 2025).

When you submit your 2025/26 final declaration in January 2027, your actual tax liability is also £6,000.

Balancing payment = £6,000 − £6,000 = £0

You owe nothing extra because your payments on account covered the full amount.

Example: Income increases

Your tax bill for 2024/25 was £6,000. You made two payments on account totalling £6,000.

Your income increased in 2025/26 and your actual tax liability is £8,000.

Balancing payment = £8,000 − £6,000 = £2,000

You owe an additional £2,000 to cover the shortfall.

Example: Income decreases

Your tax bill for 2024/25 was £6,000. You made two payments on account totalling £6,000.

Your income decreased in 2025/26 and your actual tax liability is £4,000.

Balancing payment = £4,000 − £6,000 = −£2,000

You've overpaid by £2,000. HMRC will refund this to you.

Why balancing payments can be higher or lower

Your balancing payment depends on how your income changes from year to year:

• Income stable: Balancing payment will be small or zero
• Income increases: Balancing payment will be higher (because payments on account were based on a lower previous year)
• Income decreases: Balancing payment will be lower or negative (you'll get a refund)

If you had a particularly unusual year (high one-off income, or exceptionally low income), your balancing payment the following year might be surprisingly large or small.

When balancing payments are due

Balancing payments are due on 31 January following the end of the tax year.

For example, your balancing payment for the 2025/26 tax year is due on 31 January 2027.

This is the same deadline as your first payment on account for the following tax year, which is why the January payment can be substantial.

See Payment deadlines for full details.

Overpayments and refunds

If your balancing payment calculation shows you've overpaid, HMRC will usually refund the money automatically to your bank account.

However, HMRC will first check if you owe any other tax (from previous years or other sources) and use the overpayment to settle those debts first.

You can check the status of any refund through your HMRC online account.

If you believe you're owed a refund and haven't received it, contact HMRC directly.

Note

Provestor cannot process refunds or show whether HMRC owes you money. Check your HMRC online account for refund information.

How payments on account affect your balancing payment

If you make payments on account during the year, they reduce your balancing payment.

If you don't make payments on account (because your tax bill is below £1,000 or you've paid more than 80% through other sources), your balancing payment will equal your full tax liability for the year.

For more information, see HMRC's guidance on Self Assessment tax bills.