Self-Employed Tax Calculator 2026/26
How Are Self-Employed People Taxed in the UK?
If you are self-employed (sole trader or partner in a business), you pay tax differently to employees. Instead of PAYE, you pay tax through Self Assessment — filing an annual tax return with HMRC and paying tax in two instalments (31 January and 31 July each year).
Self-Employed Tax & NI Rates 2026/26
Income Tax
Self-employed people pay the same income tax rates as employees on their taxable profit (income minus allowable business expenses):
| Tax Band | Profit Range | Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic Rate | £12,571 – £50,270 | 20% |
| Higher Rate | £50,271 – £125,140 | 40% |
| Additional Rate | Over £125,140 | 45% |
National Insurance for Self-Employed 2026/26
| NI Class | When Payable | Rate 2026/26 |
|---|---|---|
| Class 2 | If profit ≥ £12,570 (small profits threshold) | £3.45/week (£179.40/year) |
| Class 4 | Profit £12,570 – £50,270 | 6% |
| Class 4 (upper) | Profit over £50,270 | 2% |
Note: Class 2 NIC was due to be abolished but has been retained for 2026/26 as it provides access to State Pension and other benefits.
Self-Employed Tax Calculation Example (£45,000 profit)
| Deduction | Amount |
|---|---|
| Income Tax (Basic Rate, 20% on £32,430) | £6,486 |
| Class 4 NIC (6% on £32,430) | £1,946 |
| Class 2 NIC | £179 |
| Total Tax & NIC | £8,611 |
| Take-Home Profit | £36,389 |
Allowable Business Expenses
You can deduct allowable business expenses from your income to reduce your taxable profit. Common allowable expenses include:
- Office costs (equipment, stationery, phone bills for business use)
- Travel costs (mileage, fuel, vehicle insurance for business travel)
- Professional services (accountant, legal fees)
- Marketing and advertising
- Staff costs (if you employ others)
- Training related to your business
Payment on Account
HMRC requires most self-employed people to make advance payments towards their tax bill (Payments on Account). Each payment is 50% of the previous year's tax bill, due on 31 January and 31 July. This can cause a large initial payment when you first start self-employment.
⚠️ Set aside money for tax: A common rule of thumb for self-employed people is to set aside 25–30% of all income for tax. This helps avoid a large unexpected bill in January.
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