Self Assessment has two payment deadlines, not one.
Ask any UK taxpayer when their tax deadline is and you'll get the same answer: January 31, Self Assessment day. The date accountants track and HMRC advertises.
Ask them about July 31 and you'll mostly get blank stares.
Thousands of Self Assessment taxpayers end up owing HMRC interest every summer. Not because they did anything wrong, just because nobody told them a second payment was due. If your last tax bill was large enough, HMRC expects a payment from you this month. Miss it and interest starts building from the next day, at rates that are currently high by historical standards.
For crypto investors there's an added complication: since tax payment is based on last year's numbers and since 2024/25 was a strong year and things have slowed down since, you could end up prepaying tax on gains you no longer have.
Let's go through what payments on account actually are, who they apply to, what's different for crypto investors, and the legal way to reduce your July payment if your income has dropped.
What payments on account actually are
Payments on account are HMRC's way of making Self Assessment taxpayers pay as they go, roughly like PAYE employees do, instead of settling everything in one annual hit.
The mechanics:
if your last Self Assessment tax bill was more than £1,000, and less than 80% of your tax was collected at source (through PAYE, for example), HMRC requires you to make two advance payments towards the current tax year;
each payment on account is 50% of last year's tax bill (income tax plus Class 4 National Insurance);
the first is due January 31 (alongside any balance for the previous year, which is why January bills feel so brutal);
the second is due July 31.
Then, when you file the actual return for the year, the two prepayments are credited against your real bill: pay the difference if you owe more (the "balancing payment"), or get a refund if you prepaid too much.
The logic is reasonable. The execution catches people constantly, for one simple reason: the amounts are based entirely on the past. HMRC doesn't know your current year is different. It assumes this year looks exactly like last year, and bills you accordingly.
Where crypto investors get burned twice
Now apply that mechanism to crypto, an asset class where a single year can swing from life-changing gains to gut-wrenching losses, and you see the problem.
Burn number one: the phantom-profit prepayment. Suppose 2024/25 was your big year, staking rewards flowing, successful trading, income through the roof. Your 2024/25 return produced a hefty tax bill, and HMRC dutifully set your 2025/26 payments on account at 50% of it each. If the market has since turned and your income has collapsed, the July 31 demand doesn't care. You're being asked to prepay tax on a year that, for you, isn't happening.
Burn number two: the cash-flow mismatch. Even when the tax is genuinely owed, crypto wealth is notoriously illiquid at the wrong moments. The July payment lands when many investors are fully deployed in positions they don't want to unwind, and selling crypto to pay a tax bill is itself a disposal with its own tax consequences. A summer deadline you forgot about can force exactly the kind of unplanned selling that creates next year's tax mess.
A nuance that matters (and that most content skips): payments on account are calculated on income tax and Class 4 NIC, not on Capital Gains Tax. CGT is settled separately, in one lump, the following January 31. So whether July 31 affects you depends on how your crypto profits are taxed:
If your crypto gains were capital gains (the typical investor position: buying, holding, disposing), those gains don't feed into payments on account, your July exposure comes from your other income;
If you have meaningful crypto income, staking rewards, lending yield, mining, airdrops taxed as miscellaneous income, or trading activity substantial enough to be taxed as a trade, that income does drive payments on account, and a big income year inflates the following July's bill;
Most active crypto users have a mix, which is precisely why knowing your real numbers, by category, is the whole game.
You invest. We handle the tax.
The fix: you can reduce the payment, with real numbers
Here's the part too few people know: payments on account are not set in stone. If you have grounds to believe this year's tax bill will be lower than last year's, you can apply to reduce your payments on account, including the one due July 31. It's done through your online Self Assessment account or form SA303, and it's entirely routine.
But there are two rules of engagement:
Rule one: reduce with evidence, not with hope. You need a genuine, defensible estimate of the current year's income. "The market feels bad" is not a number. Reconciled year-to-date figures, income received, gains and losses realised, across every platform and wallet, are.
Rule two: don't over-reduce. This is the trap inside the fix. If you cut your payments on account and your final bill turns out higher than what you paid, HMRC charges interest on the shortfall, backdated to the original due dates. Guess too optimistically and you've swapped a cash-flow problem for an interest bill. The reduction is a precision tool: it rewards people who actually know their position and punishes people who guess.
Which brings us to the uncomfortable question at the heart of this whole deadline: do you actually know your year-to-date position? Not your portfolio balance, your taxable position: realised gains and losses after the matching rules, income received at sterling values on the day it arrived, fees accounted for. For anyone active across several exchanges, a DeFi protocol or two and a lending platform, that number is genuinely hard to produce by hand. And it's the number everything depends on.
Your July 31 checklist
With the deadline days away, here's the practical sequence:
Check whether you owe a payment on account. Log into your HMRC online account and look at "payments on account" for 2025/26. If your last bill was over £1,000, there's probably a demand sitting there;
Establish your real year-to-date position. Consolidate all platforms, income by category, realised gains and losses with matching rules applied. This is the number that tells you whether to pay in full or apply to reduce;
If this year is genuinely down, apply to reduce via your online account or SA303, before the deadline, with your evidence filed away in case HMRC asks;
If the bill stands, pay by July 31. Interest accrues daily from August 1, automatically, no grace period;
If you can't pay in full, act before the deadline anyway, HMRC's Time to Pay arrangements exist precisely for this, and they're dramatically better negotiated before you're late than after;
Diarise the pattern: January 31 and July 31, every year you remain in Self Assessment above the threshold. The second one never gets less forgotten.
Where Finbooks comes in
Everything above funnels into one requirement: clean, reconciled, year-to-date numbers. Not exchange screenshots. Not a portfolio tracker's unrealised PnL. Your actual taxable position, computed the way HMRC computes it.
That's precisely what Finbooks produces:
Connect your exchanges and wallets, via API or CSV, across 200+ platforms, and your full transaction history is consolidated in one place;
Income is classified and valued correctly: staking rewards, lending yield and other crypto income captured at sterling value on the date received, the exact figures that drive your payments on account exposure;
Gains and losses are computed under HMRC's rules, same-day matching, the 30-day rule, Section 104 pooling, so your realised position is the legal number, not the exchange widget's guess;
Your year-to-date position is always current, which means that when July 31 approaches, the decision to pay or reduce takes minutes instead of a panicked weekend of spreadsheets;
And if you do reduce your payments on account, you have the documentation behind the estimate, the thing that turns a reduction from a gamble into a defensible position.
A payment on account is HMRC guessing your year from your past. The reduction mechanism is your right to correct that guess, but only with real numbers. Finbooks is how you have them.
Know your actual position before July 31. Start today your 7 days free trial, sync your platforms, and see your year-to-date PnL, clear, reconciled and ready to act on.
