Self-Employed Tax Calculator 2026/27

How self-employed tax works

As a sole trader you pay tax on your profit: turnover minus allowable business expenses. Two taxes apply, and you settle both through your Self Assessment tax return:

1. Income Tax at the same rates as employees: 20%, 40% and 45% above the £12,570 Personal Allowance (Scotland has its own six bands).
2. Class 4 National Insurance: 6% on profits between £12,570 and £50,270, then 2% above that.

Nobody deducts tax for you as you earn it, so it’s up to you to put money aside. The calculator gives you a monthly set-aside figure for exactly that reason.

Worked example: £52,000 turnover, £12,000 expenses

A freelance designer turns over £52,000 with £12,000 of expenses, making £40,000 profit. For 2026/27 they owe:

Line	Amount
Taxable profit	£40,000.00
Income Tax	£5,486.00
Class 4 National Insurance	£1,645.80
Total Self Assessment bill	£7,131.80
Put aside each month	£594

Their turnover is over £50,000, so they also fall into Making Tax Digital for Income Tax. That means keeping digital records and sending HMRC quarterly updates through compatible software.

Side income on top of a job

If you have a PAYE job as well, your salary uses up your Personal Allowance and basic-rate band first. Your self-employed profit is taxed on top of it. Someone earning £35,000 from employment with £10,000 profit from a side business owes £2,000.00 Income Tax on that profit, plus £0.00 Class 4 NI. Add your salary under Other income, pension & loans to see this.

Payments on account: the January surprise

When your bill is over £1,000, HMRC usually asks for two payments on account towards next year. Each one is half of this year’s Income Tax and Class 4 NI. In your first year of trading, the 31 January payment can include:

• the full balancing payment for the year just ended, plus
• the first payment on account for the current year.

That can mean paying around one and a half years of tax in one go. The Payment timeline table under the calculator shows the dates and amounts. If you expect lower profits next year, you can ask HMRC to reduce your payments on account, but you’ll pay interest if you reduce them too far.

Expenses you can claim

Allowable expenses must be wholly and exclusively for your business. Common ones include:

• stock, materials and goods you resell
• office costs, software, phone and broadband (the business share)
• travel for business, excluding your normal commute, using actual costs or simplified mileage
• a proportion of home costs if you work from home, or HMRC’s flat rate
• professional fees, insurance and marketing

You can’t claim clothing (except uniforms and protective wear), entertaining clients, or fines. If your expenses are small, the £1,000 trading allowance might be simpler. Turn it on and the calculator deducts £1,000 instead.

Pensions reduce your bill

Personal pension contributions get tax relief at your highest rate. Add them as a gross figure (what lands in the pension, including relief). For higher-rate payers, each £1,000 contributed extends the basic-rate band by £1,000, which saves £200 on top of the relief the provider claims.

Student loans for the self-employed

If you repay a student loan, HMRC collects it through Self Assessment based on your total income above the plan threshold. It’s included in your balancing payment but not in payments on account. Tick your plans under Other income, pension & loans.

What this calculator does not cover

The results assume you’re a sole trader with income from one trade. They don’t cover partnerships, limited companies (which pay Corporation Tax and dividends instead), capital allowances beyond a single expense figure, losses carried forward, or Construction Industry Scheme deductions. For a limited company, you’d normally take a small salary plus dividends, which is a different calculation.