Self-employed tax calculator
What you owe on your profits, and what HMRC will actually ask for on 31 January.
- Profit after expenses
- £0
- Income tax
- £0
- Class 4 National Insurance
- £0
- Payment on account, each
- £0
- Due on 31 January
- £0
Two taxes on the same profit
Self-employed profit is taxed twice over, at different rates and against different thresholds. Income tax works exactly as it does on a salary: nothing on the first £12,570, then 20%, 40% and 45% as you climb. Class 4 National Insurance runs alongside it at 6% between £12,570 and £50,270, then 2% above.
Six per cent, not the eight an employee pays. That gap is one of the few genuine tax advantages of working for yourself, and it is worth roughly £750 a year on a £50,000 profit. Class 2 National Insurance no longer costs anything above the small profits threshold of £7,105: it is treated as paid, and your State Pension record is protected regardless.
The January problem
This is what catches out almost everyone in their first year. If your bill exceeds £1,000, HMRC does not simply collect it. It asks for that year's tax plus half of next year's on 31 January, and the second half on 31 July.
So a first bill of £8,000 arrives as a demand for £12,000. The money is not lost, it is credited against next year, but the cash has to exist in January. The line above marked "due on 31 January" is the number to plan around, not the total due.
Put the percentage aside as you earn it
The effective rate shown above is the share of each invoice that was never really yours. Moving that percentage into a separate account the day each payment lands is the single habit that separates people who find January routine from people who find it frightening. Round it up a little: it costs nothing to have too much set aside.
What this leaves out
It assumes the standard personal allowance, a full year of trading, and that any other income you entered has already been taxed at source. It does not model the VAT threshold, capital allowances on equipment, the trading allowance, losses carried forward, student loan repayments, or a partnership. Nor does it handle Making Tax Digital quarterly reporting, which now applies above certain income levels. An accountant usually costs less than the mistakes.
Common questions
- Why is my January bill so much bigger than the tax I owe?
- Payments on account. If your bill is over £1,000, HMRC asks for the year's tax plus half of next year's on 31 January, and the other half on 31 July. The first January after going self-employed therefore lands at one and a half times what you expected.
- Is Class 4 National Insurance the same as an employee pays?
- No, and confusing them is the commonest error here. Employees pay 8% Class 1 between the thresholds. Self-employed people pay 6% Class 4 across the same band. Both pay 2% above the upper limit.
- Do I still pay Class 2 National Insurance?
- Not if your profits are above £7,105: it is treated as paid and protects your State Pension record without costing anything. Below that you can pay it voluntarily to keep the year qualifying, which is usually worth doing.
- What can I claim as an expense?
- Anything wholly and exclusively for the business: materials, tools, professional fees, business travel, and a proportion of home costs if you work from home. Not commuting, not ordinary clothing, and not client entertaining. Keep the records for five years after the filing deadline.
- Should I set money aside as I go?
- Yes. The effective rate this calculator shows is a good guide to the share of every invoice that is not yours. Moving that percentage into a separate account as each payment arrives is what turns January from a crisis into an administrative task.