Self-Employed Tax Calculator UK

Q: How much tax do I pay as self-employed in the UK?

You pay Income Tax and Class 4 National Insurance on your profit after expenses. Income Tax is 20% above £12,570, 40% above £50,270, and 45% above £125,140; Class 4 NI adds 6% then 2% on the same profit. On £30,000 of profit that is about £3,486 Income Tax plus £1,046 Class 4, a total of £4,532, leaving roughly £25,468. The combined basic-rate margin is 26%, so set aside around a quarter to a third of your profit for tax.

Q: Is self-employed tax based on turnover or profit?

Profit, not turnover. You deduct your allowable business expenses from your income first, and tax is calculated on what is left. So £50,000 of turnover with £20,000 of expenses is taxed as £30,000 of profit. If your expenses are under £1,000, you can claim the £1,000 trading allowance instead, with no need to track costs. The more legitimate expenses you claim, the lower the profit your tax is based on, which is why good record-keeping matters.

Q: What are payments on account?

They are advance payments towards next year's tax, due if your Self Assessment bill is over £1,000. Each is 50% of your previous year's bill, paid on 31 January and 31 July. This is why a first-year January demand is 150% of the bill: you pay the year just gone plus a 50% advance. A £6,000 bill arrives as £9,000. It is not extra tax, just collected earlier, but it is the single biggest cash-flow shock in self-employment if you have not planned for it.

Q: Do I pay National Insurance as well as Income Tax?

Yes. Class 4 NI is charged on the same profit as Income Tax, 6% between £12,570 and £50,270, then 2%. So a basic-rate sole trader's real marginal rate is 26%, not 20%, once NI is included. Class 2 NI, the contribution that builds your State Pension, is treated as paid for free once your profit tops £7,105, so for most it adds nothing to the bill.

Q: How much should I set aside for tax?

A common rule of thumb is 25 to 30% of your profit above the personal allowance, which covers basic-rate Income Tax at 20% plus Class 4 NI at 6%. Higher earners should set aside more, since the 40% band and the 60% trap push the rate up. In your first year, add half again to cover the payment on account. The safest approach is to move a percentage of each payment received into a separate tax account as you go.

Q: I'm employed and self-employed — how is my tax worked out?

Your PAYE salary uses your personal allowance first, so your self-employment profit is usually taxed from the basic rate up. You pay Class 1 NI on the job and Class 4 on the self-employment, though an annual maximum can cap the combined NI. The £1,000 trading allowance still applies to the self-employed income. If most of your tax is already collected through PAYE, you may avoid payments on account, since they are only triggered when under 80% of your tax is deducted at source.

Work out your full self-employed tax bill — Income Tax and National Insurance together — and brace for the one that catches every first-year sole trader: the January payment that’s 150% of what you’d expect.

Tax on profit, not turnover Income Tax + Class 4 NI Free, no signup

Self-employed tax in the UK is two charges on the same profit: Income Tax at 20%, 40%, or 45%, and Class 4 National Insurance at 6% then 2% — both on your profit after expenses, not your turnover. On £30,000 of profit you’d pay roughly £3,486 Income Tax plus £1,046 Class 4, keeping about £25,468. The first thing to get right is that tax is charged on profit, not revenue: deduct your allowable expenses (or the £1,000 trading allowance) first. The trap that blindsides nearly every first-year sole trader is payments on account: in your first January you pay the full tax bill for the year just gone plus a 50% advance on next year’s, so a £6,000 bill arrives as £9,000 — 150% of what you’d budgeted. There’s also a 60% effective tax band hidden between £100,000 and £125,140, where your personal allowance tapers away. This calculator shows your Income Tax, your NI, and the payments on account to set aside. For the NI detail, see the Class 2 & 4 NI Calculator; to weigh up incorporating, the Sole Trader vs Ltd Calculator.

Common examples:

Income and expenses

Annual self-employed turnover

Total sales/income before expenses.

Allowable business expenses

Other taxable income

Employment, rental profit, pension or other income outside self-employment.

Tax year

Tax relief and allowances

Pension contribution

Simple relief estimate. Exact pension relief depends on scheme type and income.

Gift Aid donations

Personal Allowance

Income Tax region

This version applies EWNI bands. Scotland triggers a warning.

National Insurance

Class 2 NI option

Class 2 weekly rate

Small Profits Threshold

Reached State Pension age?

Payments on account and planning

Payments on account

Usually relevant if last Self Assessment bill was over £1,000 and less than 80% was collected at source.

Previous balancing payment

Tax already paid at source

PAYE tax deducted, CIS tax suffered, or other tax already paid.

Monthly set-aside view

Self-employed tax result

Estimated tax + NI bill

Calculating…

Taxable profit

—

Income Tax

—

Class 4 NI

—

Class 2 NI

—

Take-home after tax

—

Monthly set-aside

—

Self Assessment breakdown

Calculating…

Simplified estimate only. It excludes student loans, child benefit charge, Marriage Allowance, losses, capital allowances, VAT, CIS details and full Scottish tax bands.

✦ Explain with AI →

Self-employed tax — quick lookup

The left table shows the combined Income Tax and Class 4 NI on common profit levels, and what you keep. The right lists the key bands and thresholds. The headline is in the left table: your real self-employed tax bill is the two charges added together, which is more than most people expect when they look at Income Tax alone.

Tax + NI by annual profit

Profit	Tax + NI	Keep
£20,000	£1,932	£18,068
£30,000	£4,532	£25,468
£50,270	£9,802	£40,468
£60,000	£13,889	£46,111
£110,000	£35,889	£74,111

Key bands & thresholds

Item	Value
Personal Allowance	£12,570
Basic rate (20%)	to £50,270
Higher rate (40%)	to £125,140
Additional (45%)	over £125,140
Trading allowance	£1,000

Figures are for England, Wales, and Northern Ireland and combine Income Tax with Class 4 NI on profit after expenses. On £30,000 of profit, that’s roughly £3,486 Income Tax plus £1,046 Class 4 = £4,532, leaving £25,468. Scotland has different Income Tax bands. Class 2 NI is treated as paid above £7,105 of profit, so it doesn’t add to the bill for most. These are the current bands and can change.

How self-employed tax works

As a sole trader you don’t have an employer deducting tax for you — you report your profit through Self Assessment and pay everything yourself. Two things determine the bill: what counts as taxable profit, and the two separate charges that apply to it. Then there’s the timing, which is where the surprises live.

Tax is on profit, not turnover

You pay tax on your profit — turnover minus allowable expenses, not on the money coming in. Allowable expenses are costs incurred wholly and exclusively for the business: materials, travel, insurance, software, use of home, and so on. If your expenses are tiny, you can instead claim the £1,000 trading allowance, deducting £1,000 from your income with no need to track costs. Get your expenses right and you cut the profit your tax is calculated on.

The self-employed tax billTaxable profit = turnover − allowable expenses (or − £1,000 trading allowance) Income Tax: 20% / 40% / 45% on profit above £12,570 Class 4 NI: 6% on £12,570–£50,270, then 2% Total bill = Income Tax + Class 4 NI

Two taxes on the same profit

The same profit is hit twice. Income Tax is charged at 20% on profit between £12,570 and £50,270, 40% from there to £125,140, and 45% above. Class 4 National Insurance adds 6% on profit between £12,570 and £50,270, then 2% above. So a basic-rate sole trader is really paying 26% at the margin (20% + 6%), not 20%. Forgetting the NI half is the most common reason a self-employed tax bill comes in higher than expected. Class 2 NI is treated as paid for free above £7,105 of profit, so for most it adds nothing.

The timing trap: payments on account

Here’s what blindsides first-year sole traders. If your Self Assessment bill is over £1,000, HMRC makes you pay payments on account: advance instalments towards next year’s tax. In your first January you settle the year just gone and pay 50% of that bill again as an advance, with another 50% due in July. So a £6,000 first bill arrives as £9,000 in January — 150% of what you’d saved for. It evens out in later years, but the first hit is brutal if you haven’t planned for it.

Worked examples

Four sole traders at different profit levels, showing the full bill and the timing.

Scenario 1 · Basic-rate sole trader

The two taxes add up

Profit £30,000
Income Tax: (£30,000 − £12,570) × 20% = £3,486
Class 4 NI: (£30,000 − £12,570) × 6% = £1,046
Total: £4,532 · keep £25,468

A freelancer on £30,000 of profit pays £3,486 in Income Tax and £1,046 in Class 4 NI, a combined £4,532. The effective marginal rate is 26%, not the 20% headline, because the NI sits on top. This is the figure to set aside through the year — roughly a quarter of every pound of profit above the personal allowance — so the January bill doesn’t bite.

Scenario 2 · First year — payments on account

The 150% January shock

First-year bill: £6,000
Plus first payment on account: £3,000 (50%)
Due 31 January: £9,000 · then £3,000 more in July

A new sole trader with a £6,000 first tax bill expects to pay £6,000. Instead, that January they owe £9,000 — the £6,000 balance plus a £3,000 payment on account towards next year — with another £3,000 due in July. That’s 150% of the headline bill in one go. It’s not extra tax, just paid earlier, but without warning it’s the single most common cash-flow shock in self-employment. Set aside for it from day one.

Scenario 3 · Higher-rate sole trader

Into the 40% band

Profit £60,000
Income Tax ≈ £11,432 · Class 4 NI ≈ £2,457
Total: £13,889 · keep £46,111

At £60,000 of profit, part falls into the 40% Income Tax band above £50,270, while Class 4 NI drops to 2% on the same slice. The combined bill is about £13,889. This is often the level where sole traders start asking whether incorporating as a limited company would be more tax-efficient, since dividends are taxed differently — though that brings its own costs and admin.

Scenario 4 · The 60% trap

Where £100k–£125k hurts most

Profit £110,000
Personal Allowance tapered away above £100,000
Effective marginal rate in this band: ~60% (plus NI)

Between £100,000 and £125,140, every £2 of profit removes £1 of personal allowance, so that £1 also becomes taxable at 40%. The result is an effective 60% Income Tax rate on profit in this band — before the 2% Class 4 NI on top. A sole trader on £110,000 keeps far less of each extra pound here than at £60,000 or £130,000. Pension contributions are the usual way to manage this band, since they reduce the profit that triggers the taper.

Four things that decide your self-employed tax bill

Most calculators give you a single number and stop. The four points below are what actually move your bill — and where the avoidable mistakes and nasty surprises live. Work through them before you budget for tax:

1

Profit, not turnover — claim every expense

Tax is on profit, so every allowable expense you claim reduces it. Materials, travel, software, use of home, insurance — all come off before tax. If costs are under £1,000, the trading allowance may beat claiming actual expenses. This is the lever you control most directly.
turnover − expenses = taxed profit
2

Two taxes, not one

Income Tax and Class 4 NI both hit the same profit, so a basic-rate sole trader pays 26% at the margin, not 20%. Budgeting only for Income Tax is why so many bills come in higher than expected. Set aside for both.
20% IT + 6% NI = 26% basic margin
3

Payments on account — the first-year 150%

If your bill tops £1,000, your first January is the bill plus 50% again as an advance, with another 50% in July. A £6,000 bill becomes £9,000 up front. It’s not extra tax, just earlier — but it wrecks cash flow if unplanned.
first Jan = 150% of the bill
4

Marginal traps — the 60% band

Between £100,000 and £125,140 the personal allowance tapers, creating an effective 60% rate. Pension contributions reduce the profit that triggers it. Knowing where the traps sit lets you plan around them rather than walk into them.
£100k–£125k = ~60% effective

£30,000 profit — the full picture, not just Income Tax

What you’d budget for vs what’s really due:

Income Tax alone (the headline)£3,486

Class 4 NI on top£1,046

True tax bill£4,532

First January with payments on account£6,798

On £30,000 of profit, budgeting for Income Tax alone (£3,486) misses the £1,046 of NI, and in the first year the payment on account adds another 50% on top — so the first January demand is closer to £6,798 than the £3,486 a naive look at Income Tax suggests. That gap, nearly double, is why self-employed tax surprises people. The discipline is simple: calculate on profit after expenses, add both taxes, set aside roughly 25–30% of profit through the year, and plan for the first-year payment on account separately. Do that and the January bill is something you’ve already saved for, not a crisis. For the NI side in detail, see the Class 2 & 4 NI Calculator.

If you’re employed and self-employed at once

Many sole traders also have a job. Your PAYE salary uses your personal allowance first, so your self-employment profit is often taxed from the basic rate up, with no tax-free slice left. You pay Class 1 NI on the job and Class 4 on the self-employment, though an annual maximum can cap the combined NI. The £1,000 trading allowance still applies to the self-employed income. If most of your tax is already collected through PAYE, you may avoid payments on account — they’re only triggered when under 80% of your tax is deducted at source.

Two scenarios that change the picture

What if…

You claim £5,000 more in expenses?

Profit before £30,000

Profit after £5k expenses £25,000

Tax + NI saved ~£1,300

Claiming a legitimate £5,000 of expenses cuts taxable profit from £30,000 to £25,000 and saves about £1,300 in combined tax and NI — 26% of the expense. Every allowable cost you fail to claim is money left with HMRC. Keep good records and claim everything you’re entitled to.

What if…

You forget about payments on account?

Budgeted for first bill £6,000

Actually due in January £9,000

Unplanned shortfall £3,000

Save only for the £6,000 you think you owe and the £3,000 payment on account leaves you £3,000 short in your first January. Missing it can mean interest and a scramble for cash. From your very first year, set aside for the bill plus half again — or check if you can reduce the payment on account when income will be lower.

Key self-employed tax terms explained

Self-employed tax brings together Income Tax, National Insurance, and the Self Assessment machinery that collects them. The ten terms below cover what you’ll meet when working out and paying your bill.

Taxable profit: Your turnover minus allowable expenses — the figure your tax is actually calculated on, not your total income. Claiming every legitimate expense reduces it, and so reduces your bill.
Allowable expenses: Costs incurred wholly and exclusively for the business — materials, travel, insurance, software, a proportion of home costs. They’re deducted from turnover before tax, so good record-keeping pays for itself.
Trading allowance: A £1,000 tax-free allowance on gross trading income. Claim it instead of actual expenses if your costs are under £1,000. Earn under £1,000 in total and you needn’t tell HMRC at all.
Personal Allowance: The £12,570 of profit you can earn tax-free before Income Tax starts. It tapers away above £100,000 of income, disappearing entirely at £125,140 — the cause of the 60% effective band.
Class 4 NI: National Insurance on profits — 6% between £12,570 and £50,270, then 2%. It sits on top of Income Tax on the same profit, so a basic-rate trader’s true marginal rate is 26%.
Class 2 NI: The flat-rate contribution that builds your State Pension. Treated as paid for free once profits top £7,105, so for most sole traders it adds nothing to the bill, but it’s the one that counts.
Payments on account: Advance instalments towards next year’s tax, due if your bill tops £1,000. Each is 50% of last year’s bill, paid in January and July — the reason a first-year January demand is 150% of the bill.
Balancing payment: The amount due on 31 January to settle the gap between the payments on account you made and the tax actually owed for the year. It also captures Capital Gains Tax and student loan repayments.
Self Assessment: The annual return through which the self-employed report profit and pay Income Tax and Class 4 NI. The filing and payment deadline for online returns is 31 January after the tax year ends.
Making Tax Digital (MTD): HMRC’s move to digital, quarterly reporting for Income Tax. MTD for Income Tax began rolling in from April 2026 for sole traders and landlords with higher income, changing how records are kept and submitted.

Five mistakes the self-employed make with tax

Self-employed tax catches people out because there’s no employer doing it for you. These five errors, drawn from the recurring r/UKPersonalFinance and r/SmallBusinessUK threads, are the costly ones.

Budgeting for Income Tax but forgetting NI

Class 4 NI sits on top of Income Tax on the same profit, so a basic-rate trader’s real marginal rate is 26%, not 20%. Saving only for the Income Tax leaves you short when the bill arrives. Set aside for both — roughly 25–30% of profit above the personal allowance.

Cost: a bill ~30% bigger than budgeted Fix: provision for Income Tax + Class 4 NI

Not planning for payments on account

The first January isn’t just last year’s bill — it’s that plus 50% again as an advance, with another 50% in July. A £6,000 bill becomes £9,000 up front. Many new sole traders are blindsided. Save for the bill plus half again in year one, and check if you can reduce the payment when income will fall.

Cost: a 150% first-year cash-flow shock Fix: budget bill + 50% in the first year

Leaving allowable expenses unclaimed

Because tax is on profit, every expense you don’t claim is taxed at 26% or more. Sole traders who don’t track travel, software, use of home, or insurance overpay. Keep records through the year and claim everything you’re entitled to — or use the £1,000 trading allowance if your costs are lower.

Cost: overpaying ~26% of every missed expense Fix: track and claim all allowable costs

Walking into the 60% band

Between £100,000 and £125,140, the tapering personal allowance creates an effective 60% Income Tax rate. Sole traders who don’t notice keep barely 40p of each extra pound there. A pension contribution reduces the profit that triggers the taper, often the most efficient fix — plan before year end.

Cost: ~60% effective tax on £100k–£125k Fix: use pension contributions to manage it

Confusing turnover with profit

Tax is on profit, not the money coming in. Sole traders who set aside a percentage of turnover either over-save or, if margins are thin, panic unnecessarily. Base your tax provision on profit after expenses, and keep business and personal money separate so the figure is easy to see.

Cost: mis-budgeting and cash-flow stress Fix: provision against profit, not turnover

Frequently asked questions

How much tax do I pay as self-employed in the UK?

You pay Income Tax and Class 4 National Insurance on your profit after expenses. Income Tax is 20% above £12,570, 40% above £50,270, and 45% above £125,140; Class 4 NI adds 6% then 2% on the same profit.

On £30,000 of profit that’s about £3,486 Income Tax plus £1,046 Class 4, a total of £4,532, leaving roughly £25,468. The combined basic-rate margin is 26%, so set aside around a quarter to a third of your profit for tax.

Is self-employed tax based on turnover or profit?

Profit, not turnover. You deduct your allowable business expenses from your income first, and tax is calculated on what’s left. So £50,000 of turnover with £20,000 of expenses is taxed as £30,000 of profit.

If your expenses are under £1,000, you can claim the £1,000 trading allowance instead, with no need to track costs. Either way, the more legitimate expenses you claim, the lower the profit your tax is based on — which is why good record-keeping matters.

What are payments on account?

They’re advance payments towards next year’s tax, due if your Self Assessment bill is over £1,000. Each is 50% of your previous year’s bill, paid on 31 January and 31 July.

This is why a first-year January demand is 150% of the bill: you pay the year just gone plus a 50% advance. A £6,000 bill arrives as £9,000. It’s not extra tax, just collected earlier, but it’s the single biggest cash-flow shock in self-employment if you haven’t planned for it. See gov.uk.

Why is my first self-employed tax bill so high?

Because of payments on account. In your first January you settle the full bill for the year just gone and pay 50% of it again as an advance towards the next year, with another 50% due in July.

So a £6,000 bill becomes £9,000 up front. After the first year it evens out, since you’ve already paid two instalments towards the current year. The fix is to save for the bill plus half again in year one, so the demand isn’t a surprise.

Do I pay National Insurance as well as Income Tax?

Yes. Class 4 NI is charged on the same profit as Income Tax — 6% between £12,570 and £50,270, then 2%. So a basic-rate sole trader’s real marginal rate is 26%, not 20%, once NI is included.

Class 2 NI, the contribution that builds your State Pension, is treated as paid for free once your profit tops £7,105, so for most it adds nothing to the bill. For the full NI detail, see the Class 2 & 4 NI Calculator.

What is the 60% tax trap for the self-employed?

Between £100,000 and £125,140 of income, your personal allowance is withdrawn by £1 for every £2 you earn over £100,000. That withdrawn allowance becomes taxable too, creating an effective 60% Income Tax rate in this band — before Class 4 NI on top.

It means a sole trader keeps barely 40p of each extra pound of profit there. The usual way to manage it is a pension contribution, which reduces the profit that triggers the taper and can restore some or all of the personal allowance.

How much should I set aside for tax?

A common rule of thumb is 25–30% of your profit above the personal allowance, which covers basic-rate Income Tax (20%) plus Class 4 NI (6%). Higher earners should set aside more, since the 40% band and the 60% trap push the rate up.

In your first year, add half again to cover the payment on account. The safest approach is to move a percentage of each payment received into a separate tax account as you go, so the money is there when the January and July deadlines arrive.

I’m employed and self-employed — how is my tax worked out?

Your PAYE salary uses your personal allowance first, so your self-employment profit is usually taxed from the basic rate up. You pay Class 1 NI on the job and Class 4 on the self-employment, though an annual maximum can cap the combined NI.

The £1,000 trading allowance still applies to the self-employed income. If most of your tax is already collected through PAYE, you may avoid payments on account, since they’re only triggered when under 80% of your tax is deducted at source. See official guidance at gov.uk.

Self-employed tax connects to your National Insurance, your business structure, and the expenses that reduce your profit. These calculators handle each piece.

Methodology & sources

How the maths works

The calculator takes your profit (turnover after allowable expenses or the £1,000 trading allowance) and applies Income Tax in bands: 20% on the slice between the £12,570 personal allowance and £50,270, 40% to £125,140, and 45% above, with the personal allowance tapered by £1 for every £2 of income over £100,000. It adds Class 4 NI of 6% on profit between £12,570 and £50,270 and 2% above, so £30,000 of profit produces about £3,486 Income Tax plus £1,046 Class 4 = £4,532. It then estimates payments on account, half the bill again where the bill exceeds £1,000 and under 80% of tax is collected at source, to show the first-year January demand. Class 2 NI is treated as paid above £7,105 and so doesn’t add to the headline figure.

These are illustrative comparisons for England, Wales, and Northern Ireland. Real outcomes depend on your exact profit, your allowable expenses, whether you also have employed income, student loan repayments, pension contributions, the payments-on-account position, and the current bands and rates, all of which can change; Scotland has different Income Tax bands. The aim is to show the full bill, both taxes plus the timing, not to replace tailored tax advice or your Self Assessment calculation.

Assumptions and conventions used

Personal Allowance: £12,570 (tapered above £100,000)
Income Tax: 20% to £50,270, 40% to £125,140, 45% above
Class 4 NI: 6% on £12,570–£50,270, 2% above
Class 2 NI: treated as paid above £7,105 (free)
Trading allowance: £1,000 off gross income
Payments on account: 50% × 2, if bill > £1,000
60% band: £100,000–£125,140 from PA taper
England, Wales & NI bands; Scotland differs. Figures illustrative current.

Primary sources

This is not tax or financial advice. This calculator estimates your self-employed Income Tax, Class 4 National Insurance, and payments on account, using standard formulas and general conventions for England, Wales, and Northern Ireland. The rates, bands, and figures shown are illustrative to demonstrate how the bill behaves, not personal advice or a recommendation. Your actual position depends on your exact profit, your allowable expenses, whether you also have employed income, student loan repayments, pension contributions, your payments-on-account position, and the current bands and rates, all of which can change; Scotland has different Income Tax bands. Self Assessment is a legal obligation with deadlines and penalties for late filing or payment, and tax is charged on profit, which you must calculate accurately from proper records. Before relying on these figures, filing your return, or planning around the bands, consult a qualified accountant and see official guidance at gov.uk.