You moved to a bigger list, picked up extra sessions, or finally cleared the slow first year as a self-employed associate. Your income jumped. Then HMRC sent you a tax bill that looked roughly double what you expected, with a second slug of it falling due in July.
That second bill is not a mistake. It's payments on account, and they catch out almost every associate dentist in the year their earnings rise sharply.
This guide is the deep-dive on the income-spike problem: how payments on account are worked out, why a good year creates a cash-flow cliff, a fully worked example with current figures, and how to reduce the payments without walking into an interest charge. If you're new to self-employed status and want the basics first, start with our wider tax guide for associate dentists.
What are payments on account, and do dentists have to pay them?
Payments on account are advance instalments towards your next Self Assessment tax bill. Each one is usually half of the total tax you owed the previous year, and they fall due on 31 January and 31 July.
HMRC asks for them because most associate dentists pay their tax a long time in arrears, so the system collects part of next year's bill before that year has even finished.
You have to make payments on account unless one of two exceptions applies. According to gov.uk, you do not have to make them if:
- the tax you owed for the last year was less than £1,000, or
- you paid more than 80% of last year's tax at source, for example through PAYE.
That 80% test is why a salaried dentist with a small amount of extra self-employed work often escapes payments on account, while a full-time self-employed associate almost never does. As an associate paid gross by the practice, very little of your tax is collected at source, so once your bill clears £1,000 you're in the system.
The instalments count towards your tax for the year, not on top of it. The mechanism that bites is the timing, not the total.
Why does a jump in income create the January and July squeeze?
Here's the trap. Your payments on account for a year are based on the previous year's bill, so a quiet first year sets a low bar. When your income then jumps, two things land on the same date.
On the following 31 January you pay:
- The balancing payment for the high-income year, which is the extra tax due once you knock off the (too-low) payments on account you already made, and
- The first payment on account for the new year, set at half of that now much larger bill.
So you settle the gap on a bumper year and pre-pay half of the next one, on the same day. Then a further instalment lands on 31 July. The bill can feel like two-and-a-half times a normal year's tax arriving in a single winter.
This is purely a cash-flow and transition problem. Once your income settles at the higher level, payments on account simply roll forward and the system steadies. It's the year of the jump that hurts.
Worked example: an associate whose profit jumped from 40,000 to 85,000
Illustrative example. Maya is a self-employed associate in England. All figures use 2025/26 rates and assume she has no other income and no Personal Allowance taper (her income is under £100,000).
Year one, 2024/25. Maya's first full year was quiet. Taxable profit after expenses: £40,000.
- Income tax: (£40,000 − £12,570 Personal Allowance) × 20% = £5,486
- Class 4 National Insurance: (£40,000 − £12,570) × 6% = £1,645.80
- Total 2024/25 liability: £7,131.80
Because that bill is over £1,000 and almost none was collected at source, HMRC sets payments on account for 2025/26 at half each: £3,565.90 due 31 January 2026 and £3,565.90 due 31 July 2026 (£7,131.80 in total).
Year two, 2025/26. Maya takes on a second site and her hours climb. Taxable profit jumps to £85,000.
- Basic-rate income tax: £37,700 × 20% = £7,540
- Higher-rate income tax: (£72,430 − £37,700) × 40% = £13,892
- Income tax total: £21,432
- Class 4 NIC main rate: (£50,270 − £12,570) × 6% = £2,262
- Class 4 NIC additional rate: (£85,000 − £50,270) × 2% = £694.60
- Total 2025/26 liability: £24,388.60
Now watch 31 January 2027:
| Item | Amount |
|---|---|
| 2025/26 total liability | £24,388.60 |
| Less payments on account already made for 2025/26 | −£7,131.80 |
| Balancing payment for 2025/26 | £17,256.80 |
| Plus first payment on account for 2026/27 (half of £24,388.60) | £12,194.30 |
| Total due on 31 January 2027 | £29,451.10 |
Then a second payment on account of £12,194.30 falls due on 31 July 2027.
So a year whose actual tax was £24,388.60 triggers £29,451.10 on one January date, when the whole of the previous year's bill was only £7,131.80. That is the squeeze. If Maya hasn't set the money aside, the gap between what she expected and what's demanded is more than £22,000.
The fix is not to dodge the tax, it's to see it coming. A simple habit of putting aside a percentage of every associate payment, and modelling the bill as profit rises, removes the shock. Our self-employed tax calculator gives you a quick read on the income tax and Class 4 NIC due on a given profit so you can size the pot.
Can I reduce my payments on account?
Yes, and for dentists whose income has dipped after a one-off good year, this matters a lot.
If you expect your next year's tax to be lower than the year the payments are based on, you can ask HMRC to reduce your payments on account to a figure you estimate. You can do this through your online Self Assessment account, or by sending HMRC form SA303.
When you'd genuinely use this:
- You had a bumper year that won't repeat, for example a block of extra locum cover or a maternity-cover stint that has ended.
- You've cut back hours, gone part-time, or taken parental leave.
- You've incorporated, so future profits will sit in a limited company and your personal self-employed profit drops. (If you're weighing that up, the NHS Pension consequences of a limited company need factoring in too, because associates working through a company are excluded from the NHS Pension Scheme.)
What you should not do is reduce the payments just to ease the January cash-flow when your income is actually holding steady or rising. That's where interest bites.
What happens if I reduce them too far?
If you reduce your payments on account below what your final bill turns out to be, HMRC charges interest on the shortfall, calculated as if the correct amount had been due on the original dates.
The late-payment interest rate is set at the Bank of England base rate plus 4% (the margin rose from 2.5% to 4% on 6 April 2025). The rate is currently 7.75% from 9 January 2026. On a few thousand pounds of under-paid instalments across several months, that adds up, and unlike a pension contribution it buys you nothing.
In practice, the safe rule for a rising-income associate is the opposite of reducing: keep the payments as HMRC has set them, and instead make sure you've reserved enough for the balancing payment that's coming. Reducing payments on account is a tool for falling income, not a way to defer tax on a year you know will be bigger.
If you're not sure which way your year is going, that's exactly the judgement call our Self Assessment service is built around: we model the likely bill before the deadline so you reduce when it's right and hold when it isn't.
Your dental self assessment payment calendar
This calendar assumes the 2025/26 tax year (the year ending 5 April 2026), filed online.
| Date | What's due |
|---|---|
| 31 January 2026 | First payment on account for 2025/26 (based on your 2024/25 bill) |
| 31 July 2026 | Second payment on account for 2025/26 |
| 5 October 2026 | Deadline to register for Self Assessment if 2025/26 is your first year |
| 31 January 2027 | File 2025/26 return online; pay the 2025/26 balancing payment; pay the first payment on account for 2026/27 |
| 31 July 2027 | Second payment on account for 2026/27 |
The double hit always lands on 31 January: a balancing payment for the year just filed plus the first instalment of the next year. Build your cash plan around that date.
Frequently asked questions
Why is my tax bill almost double what I earned the extra tax on?
Because two charges land together on 31 January. You pay the balancing amount for the year your income jumped (the tax that the earlier, smaller payments on account didn't cover) and, at the same time, the first payment on account for the new year set at half of that larger bill. It feels like double, but the second part is a pre-payment of next year's tax, not an extra charge.
Do all self-employed associate dentists pay payments on account?
Almost all do. You're caught unless your last tax bill was under £1,000, or you paid more than 80% of your tax at source. Associates paid gross by a practice have very little tax collected at source, so once the annual bill passes £1,000 the payments on account apply.
When are payments on account due for dentists?
On 31 January and 31 July each year. Each one is normally half of your previous year's tax bill. The 31 January instalment shares its date with the balancing payment and the filing deadline for the year before.
How do I reduce my payments on account if my income has dropped?
Tell HMRC the lower figure you expect, either through your online Self Assessment account or on form SA303. HMRC then resets both instalments to half of your estimate. Only do this if you genuinely expect a lower bill, because reducing below your actual liability triggers interest.
Should I reduce my payments on account if I just want more cash in January?
No. If your income is steady or rising, reducing the payments only defers tax you'll still owe, and HMRC charges interest on the shortfall from the original due dates. The current late-payment interest rate is 7.75% from 9 January 2026 (base rate plus 4%). Reserve for the bill instead of reducing the instalment.
Does incorporating my associate work stop payments on account?
Over time, largely yes, because profits then sit in the company and your personal self-employed profit falls, so the payments on account based on it shrink. But incorporation has knock-on effects, including exclusion from the NHS Pension Scheme for work done through the company, so it's a decision to model properly rather than a payments-on-account hack.
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Talk to a dental accountant before the squeeze, not after
If your associate income has jumped, the worst time to discover the January figure is in January. We forecast the balancing payment and the next year's instalments as your profit rises, advise when reducing payments on account is genuinely right, and keep you clear of avoidable interest.
Want help getting ahead of the January and July payments on account? Talk to Zmartly's dental accounting team and we'll map your real numbers to the dates above.
