Why is my first Self Assessment tax bill so high?

Short answer

Because on 31 January you pay the full tax for your first year and, on top, a first payment on account towards next year: half of that bill again. Another half follows on 31 July. A sole trader with £30,000 profit in 2025 to 2026 owes £4,531.80 for the year, but pays £6,797.70 on 31 January 2027 and £2,265.90 on 31 July 2027.

Worked example: your first year, £30,000 profit

Mia started as a sole trader on 6 April 2025 in England: £42,000 sales, £12,000 costs, £30,000 profit, no other income. Rates for 2025 to 2026 from GOV.UK, seen 5 November 2026 (Income Tax, National Insurance).

Step	Amount
Profit	£30,000.00
Less the Personal Allowance	£12,570.00
Income Tax: 20% of £17,430	£3,486.00
Class 4 National Insurance: 6% of £17,430	£1,045.80
Class 2: treated as paid, profit over £6,845	£0.00
Tax for 2025 to 2026	£4,531.80
First payment on account for 2026 to 2027: half	£2,265.90
Due by 31 January 2027	£6,797.70
Second payment on account, due 31 July 2027	£2,265.90

Within six months Mia pays £9,063.60, twice the tax of her first year. That is the method of HMRC's own example: "If you did not make any payments on account last year (for example, because it's your first time filing Self Assessment) you'll need to pay both the full amount of your tax calculation [and] your first payment on account" (GOV.UK). Scotland has its own Income Tax bands, so the figures differ there.

Do I have to make payments on account?

Yes, unless either last year's tax was under £1,000, or more than 80% of it was already collected outside Self Assessment, for example through your PAYE tax code. Each payment is half of last year's bill, due by midnight on 31 January and 31 July, and it includes Class 4 National Insurance (GOV.UK).

Next year's profit will be lower: can I pay less?

Yes. In your HMRC online account choose 'Reduce payments on account', or send form SA303. You give your expected income and HMRC works out the new amounts. If the real bill turns out higher, you pay interest on the difference (GOV.UK). Reduce only on figures you can show: a quarter of real bookkeeping beats a guess.

Year two: the balancing payment

If Mia's 2026 to 2027 tax is £6,000, her two payments on account (£4,531.80) fall short by £1,468.20. On 31 January 2028 she pays that balancing payment plus the first payment on account for 2027 to 2028, half of £6,000: £4,468.20 in total. If the year comes in lower than £4,531.80, the difference comes off what she owes or comes back to her.

Mia is also in MTD from April 2027

Her 2025 to 2026 sales of £42,000 are over the £30,000 line, so Making Tax Digital for Income Tax starts for her on 6 April 2027 (who is in). Payments on account do not change under MTD; what changes is quarterly updates and the return through software. The dates for her situation are in the UK tax deadlines calendar.

If you cannot pay on 31 January

Late payment costs 5% of the unpaid tax at 30 days, again at 6 months and at 12 months, plus interest (GOV.UK). Talk to HMRC before the date (GOV.UK: if you cannot pay). For next year, a Budget Payment Plan takes weekly or monthly Direct Debits towards the next bill, once you are up to date (GOV.UK).

Octobooks keeps the books of UK sole traders and shows the tax building up as the year goes, so 31 January is a number you already know. Octobooks prepares, you file.

Sources

Updated 2026-11-05. General information, not tax advice for your own case.