How Much Tax Do I Pay Self-Employed in the UK?

Profit. The starting calculation is straightforward:

Allowable expenses are the costs incurred wholly and exclusively for the business — for example stock, materials, software, business insurance, accountancy fees, business travel and a reasonable share of home working costs where you work from home.

There is an alternative for people with modest costs. Instead of deducting actual expenses, you can deduct the £1,000 trading allowance, if you are eligible. That is usually only worth doing when your real expenses come to less than £1,000, and you cannot claim both. If your self-employed income for the year is £1,000 or less, you normally do not need to report it at all.

The Sole Trader Profit Calculator works out the profit figure itself, including comparing the trading allowance against your actual expenses.

Most people have a standard Personal Allowance of £12,570 — income up to that amount is normally free of Income Tax. So a sole trader whose only income is £11,000 of profit would usually pay no Income Tax on it.

Two points catch people out. First, the Personal Allowance is applied across all your taxable income, not separately to each source: if you already use it up against a salary, your self-employed profit is taxed from the first pound. Second, the allowance is reduced by £1 for every £2 of income above £100,000, so it tapers away at higher incomes.

National Insurance works on its own thresholds and is not covered by the Personal Allowance, so it is possible to owe Class 4 National Insurance on profits even when your Income Tax is small.

The main one is Class 4 National Insurance, charged on your profits:

• nothing on profits up to £12,570
• 6% on profits between £12,570 and £50,270
• 2% on profits above £50,270

It is worked out on your self-employed profit alone, and it is collected together with your Income Tax through Self Assessment rather than being billed separately.

Class 2 National Insurance is the contribution that builds up qualifying years towards the State Pension. For self-employed people with profits above the small profits threshold it is generally treated as paid without a separate charge, so it does not add to a typical bill. If your profits are below that threshold, you can usually choose to pay voluntary Class 2 contributions to protect your record — the current thresholds and weekly rates are on GOV.UK.

Being employed and self-employed at the same time is normal, and the two are not taxed in separate silos. For Income Tax, HMRC adds your employment income and your self-employed profit together, then applies the Personal Allowance and the tax bands to the combined figure.

In practice this means your self-employed profit sits on top of your salary. Someone earning £45,000 in a job will find that a few thousand pounds of side-business profit is taxed at the higher rate, even though the same profit on its own would be taxed at the basic rate. The Income Tax already collected through PAYE is credited against the total, so what you owe through Self Assessment is the remaining balance.

The Self-Employed Tax Calculator UK has fields for employment income and the PAYE tax already deducted, so it can show the amount likely to be left to pay.

The figures below are produced by the same calculation engine that powers our calculators. They assume the 2025/26 tax year, a sole trader living in England, Wales or Northern Ireland, the standard £12,570 Personal Allowance, no employment or other income, no pension contributions and no student loan.

Figures are rounded to the nearest pound. Your result can differ if you have employment income, Scottish Income Tax, other income, reliefs or adjustments.

The examples above show why rules of thumb are unreliable: a flat 20% is often too little once Class 4 National Insurance is added, while 30% can be far too much when most of your profit is covered by the Personal Allowance. The proportion also rises sharply once profits push into the higher rate.

A better approach is to estimate the year and divide it into monthly amounts you move into a separate account.

Self-employed tax is reported on a Self Assessment tax return. For a tax year ending 5 April, the online return and any balancing payment are normally due by the following 31 January.

If the amount due through Self Assessment is £1,000 or more, HMRC will usually also ask for payments on account — two advance instalments towards the next tax year, due on 31 January and 31 July. This is why a first January payment can be much larger than the tax for the year you have just filed.

Our Payment on Account Calculator estimates the January and July amounts, and why is my first Self Assessment tax bill so high? explains the arithmetic behind it.