The Bottom Line
- Payments on account are the #1 reason clinicians feel ‘double-taxed’ — it is usually timing, not a mistake.
- If they apply, you commonly pay twice a year (aligned to 31 January and 31 July).
- Your defence is cashflow design: tax reserve + monthly reconciliation + conservative forecasting.
- If your income drops, you may be able to apply to reduce payments on account — do it early, not in panic.
- Never spend gross locum income. Spend ‘post-tax’ money only.
What payments on account actually are
Payments on account are advance payments towards your next tax bill. Many clinicians experience this as a ‘surprise double bill’ because the first year you enter the system can include:
• The balancing payment for the year just ended, plus
• An advance payment towards the next year.
Your strategy is not to argue with the concept. Your strategy is to budget like a business.
The two questions that matter
1) Do payments on account apply to me?
2) If yes, what is my reserve system so the dates are irrelevant?
A cashflow routine that works for doctors
1
Step 1 — Create a Tax Reserve account
Separate account. No card. No spending. This reduces self-control requirements to zero.
2
Step 2 — Move money on the same day you are paid
When locum income lands, immediately move a fixed percentage into the reserve. Adjust with your accountant later — but always reserve first.
3
Step 3 — Monthly reconciliation (30 minutes)
Once a month: reconcile income totals, check expenses, and forecast the next two payment dates. Your goal is predictability.
4
Step 4 — Build ‘tax-neutral’ personal budgeting
Budget your lifestyle from net money only. Gross income is not yours — it is a pass-through.
5
Step 5 — If income falls, consider reducing payments on account
If your circumstances change (e.g., fewer sessions), you may be able to apply to reduce. The correct move is early action + documentation, not late improvisation.
The trap
Spending the reserve because ‘I will make it back next month’.
That is how high earners end up in avoidable debt cycles. Your reserve is not a savings account — it is a liability account.
A simple mental model
Think like a practice partner for one minute:
Revenue arrives → you reserve for tax → you fund costs → what remains is profit (spendable).
Locum work is the same, just smaller.
SourceGOV.UK — Payments on account (official)
Open Link SourceGOV.UK — Self Assessment deadlines (official)
Open Link