UK Self-Employed Tax Calculator

Unlike employees, who have tax deducted automatically through PAYE, sole traders and freelancers must work out and pay their own tax via HMRC's Self Assessment. This tool estimates the two charges you'll face on your trading profit: Income Tax and Class 4 National Insurance. Enter your turnover and allowable expenses, and it shows your net profit, the tax split, your take-home, and an effective tax rate — so you know roughly how much to set aside for the January bill.

It is a simplified estimate for a sole trader with no other income. It does not handle Limited Companies (Corporation Tax and dividends), VAT, or Payments on Account — see the exclusions below.

• Your total turnover for the tax year — all sales and business income before any costs.
• Your allowable expenses — costs incurred wholly and exclusively for your trade (software, equipment, travel, a portion of home bills if you work from home). Keep receipts; HMRC can ask for them.
• Whether you have any other income (a PAYE job, rental income, dividends). If you do, this estimate will be wrong because your Personal Allowance may already be used up.
• Your VAT status — the figures you enter should exclude VAT if you're registered, because VAT you collect belongs to HMRC, not to your profit.

• Annual Trading Income (£) — your gross turnover for the tax year: everything you invoiced or sold, before deducting any costs.
• Allowable Business Expenses (£) — the total of costs you can legitimately set against that income to reduce your taxable profit. Only claim costs that are wholly and exclusively for your business — personal spending does not count.

The calculator subtracts expenses from income to find your net profit, then applies the Personal Allowance, tax bands, and Class 4 NI to that profit.

Net Profit is what's actually taxed — turnover minus expenses. Income Tax is charged on profit above the £12,570 Personal Allowance, at 20% (basic), 40% (higher, above £50,270), or 45% (additional, above £125,140). Class 4 NI is charged at 6% on profits between £12,570 and £50,270, and 2% above that. Total Take-Home is your profit minus both charges — the money you actually keep. The Effective Tax Rate is your total deductions as a percentage of profit, which is usually lower than people expect because the Personal Allowance shields the first chunk of profit entirely.

A practical rule: if your effective rate is around 18%, set aside roughly 20–25% of every invoice to cover tax and Payments on Account (explained below).

A freelance graphic designer with £50,000 turnover and £8,000 of allowable expenses (software, equipment, travel, home-office portion):

• Net Profit: £42,000
• Income Tax (20% on profit above £12,570): £5,886
• Class 4 NI (6% on profit between £12,570 and £42,000): £1,765.80
• Total Deductions: £7,651.80
• Net Take-Home: £34,348.20

An effective rate of about 18%. This freelancer should move roughly £1,450 a month into a separate HMRC savings account so the January bill never catches them short.

Assumptions

• Standard UK 2026/27 income tax bands (England, Wales, NI). Scottish rates are not applied.
• Personal Allowance £12,570, reducing by £1 per £2 earned above £100,000.
• Class 4 NI: 6% on profits £12,570–£50,270; 2% above £50,270.
• Class 2 NI abolished from 6 April 2024 for most self-employed (not calculated here).
• No other income sources; figures exclude VAT.

What is not included

• Payments on Account — if your bill exceeds £1,000, HMRC demands advance payments toward next year's tax in January and July (each 50% of the prior bill). This can roughly double what you owe in your second year.
• Student Loan repayments collected via Self Assessment.
• Capital allowances or loss carry-forward.
• Corporation Tax (Limited Companies only) and dividend tax.
• VAT obligations (registration threshold: £90,000).

• Spending the gross. The classic first-year error. The moment an invoice is paid, move 20–30% into a separate account — it is not yours to spend.
• Being caught by Payments on Account. A £7,000 bill in year one becomes £10,500 due the following January (the year-two bill plus the first payment on account). Budget for it from day one.
• Missing allowable expenses. Forgetting a portion of home utilities, mileage, or software inflates your profit and overpays tax. Keep a simple log.
• Confusing turnover with profit. £50,000 of sales is not £50,000 of taxable income. Only profit is taxed.

• Open a separate, dull savings account purely for tax and transfer your estimated percentage into it every time you're paid.
• Register for Self Assessment by 5 October after your first tax year of self-employment if you haven't already — see GOV.UK – Register for Self Assessment.
• Keep digital records of income and expenses; the Making Tax Digital rules are extending to sole traders, so good records are becoming mandatory, not optional.
• If your profit is volatile or you're approaching the VAT threshold, consider speaking to a qualified accountant — the saving usually exceeds the fee.

• UK Salary Calculator: Compare your self-employed take-home against an equivalent PAYE salary.
• Budget Planner: Manage fluctuating self-employed income against fixed monthly costs.
• Self-Employed Tax Planning Guide: Allowable expenses, Self Assessment deadlines, and VAT in depth.
• Side Hustle Tax Guide: The £1,000 Trading Allowance and reporting thresholds.

SmartMoneyTools checks statutory rates and thresholds against official government publications. Results are estimates for educational purposes and may not reflect every individual circumstance. Last reviewed: 11 September 2026.