If you are self-employed you will pay most of your tax through self-assessment. This normally involves making two payments on account (POA) on 31 January during a tax year and 31 July after the end of it.

For the 2012/13 tax year POAs are due on 31 January and 31 July 2013. These amounts are based on the tax liability reported in your 2011/12 self-assessment tax return. If your final 2012/13 tax is more, you pay the rest on 31 January 2014. If your liability drops, you’ll get a repayment when you send your 2012/13 return in – but you’ll be out of pocket in the meantime.

It’s possible to claim to reduce the POA to half your estimated current year tax before you send in the tax return. You don’t need a precise calculation, but you can usually tell when POA will be much too large.

Say your business has had a bad year in 2012/13, or you’ve taken a job that’s taxed under PAYE and so reduced your self-employed income. These factors could mean the tax due under self-assessment for 2012/13 will be lower than for 2011/12. It’s worth reducing your POAs so the money is in your bank account rather than theirs.