Payments on account are payments towards your next year's income tax. The amount you have to pay for each payment on account is half of your previous year's tax bill. So if your previous years tax bill was £2,500 (you only have to make payments on account if your tax bill is over £1,000), then each payment on account would be £1,250. This is HMRC's way of spreading out the money you'll owe in your next tax bill over the year. They can be quite a shock the first time you're asked to pay them. However, they're really just designed to make paying your tax a little less painful.