Self-Employed Tax Calculator

Tax is charged on profit, not turnover, so the first step is turnover less the deduction you choose. Class 4 National Insurance is then worked out on that trading profit alone.

Income Tax is different, because it depends on your total income. The calculator works out Income Tax on your other income plus your trading profit, works it out again on your other income alone, and treats the difference as the Income Tax caused by self-employment. That is why £10,000 of profit can carry very different tax depending on what else you earn.

• The monthly set-aside is simply the estimated annual tax divided by twelve.
• The effective rate is the total self-employed tax as a share of your trading profit.
• Nothing here is a Self Assessment bill: payments on account and other items sit outside this estimate.

A sole trader pays Income Tax and National Insurance on taxable profit: business income less allowable business costs. Turnover on its own tells you nothing about the tax due, which is why two traders with identical sales can owe very different amounts.

Class 4 National Insurance is charged on the same trading profit, at 6% between the Lower and Upper Profits Limits and 2% above. Class 2 is treated as paid once profit reaches the Small Profits Threshold, so there is no separate Class 2 charge in the result.

• Class 4 Lower Profits Limit £12,570, Upper Profits Limit £50,270.
• Small Profits Threshold £7,105 for 2026/27 (£6,845 for 2025/26).
• Income Tax uses the standard Personal Allowance and the bands for your part of the UK.

Income Tax is calculated by the same engine that powers the Income Tax calculator, using versioned rate data for the tax year you select, so bands and the Personal Allowance taper are never duplicated here. Class 4 National Insurance uses the shared self-employed National Insurance figures.

Tax attributable to self-employment is measured incrementally: Income Tax on your combined income less Income Tax on your other income alone. Figures are held at full precision and rounded to the penny only for display. Unit tests cover the threshold boundaries, the trading allowance, the allowance taper and both supported Scottish band sets.

Turnover is everything you invoice or take in from the business. Allowable expenses are the costs incurred wholly and exclusively for the business, such as materials, business insurance, accountancy fees, and the business share of phone, travel and home-working costs. Taxable profit is what is left.

Keeping clear records matters: an expense you cannot evidence is an expense HMRC can disallow, which raises profit and therefore tax.

If your trading income is small, you can deduct a flat £1,000 instead of your actual expenses. Income at or below £1,000 can be covered entirely, and whether you still need to register or report depends on your circumstances.

You cannot claim the trading allowance and your actual expenses on the same trade. Once real costs exceed £1,000, claiming expenses is normally better.

Class 4 is the main self-employed contribution: nothing below the Lower Profits Limit, 6% up to the Upper Profits Limit and 2% on profit above it. It is collected through Self Assessment alongside Income Tax.

Class 2 is treated as paid once profit reaches the Small Profits Threshold, so most traders see no Class 2 charge. Below that threshold, Class 2 can be paid voluntarily to protect entitlement to the State Pension and certain benefits — this calculator never adds it for you.

Above £100,000 of income, the £12,570 Personal Allowance falls by £1 for every £2 of income, disappearing entirely at £125,140. Between those points each extra £1 of profit is taxed at the band rate and also strips 50p of allowance, so the effective cost of extra profit is much higher than the headline band rate.

Scottish taxpayers have their own Income Tax bands on non-savings, non-dividend income, running from a 19% starter rate to a 48% top rate. Those bands apply to self-employed profit in exactly the same way as to a salary.

National Insurance is set UK-wide, so Class 4 is identical wherever you live. Only the Income Tax part of your estimate changes when you switch region.

If you have a job as well as a business, your salary usually uses up the Personal Allowance and part of the basic-rate band first. Your trading profit then sits on top, so it can be taxed at 40% even when the business itself earns modestly.

That is why this calculator shows the incremental figure rather than taxing your profit in isolation — it is the honest answer to "what does this business cost me in tax?".

The monthly set-aside figure is the modelled annual liability divided by twelve. Moving that amount into a separate account as money comes in is the simplest way to avoid a January shock.

Treat it as a working reserve rather than a guarantee. If your profit rises during the year, if you fall into payments on account, or if you have student loan repayments to make, you will need to set aside more.

Payments on account are advance payments towards another tax year. We do not add them to the headline liability, but Self Assessment may require them alongside the balancing payment for the completed year. Budget separately for this timing difference.

Self Assessment settles your whole tax position, not just your trading profit. Payments on account can front-load what you pay, while tax already deducted through PAYE, allowances, reliefs and other income all pull the final figure around.

Use this estimate for planning and budgeting, and your Self Assessment return or an accountant for the amount actually due.