Work out how much Income Tax and National Insurance you’ll owe on self-employed profits in 2026/27, and how much to put aside each month so the January bill isn’t a shock.
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How self-employed tax is worked out
- Profit = turnover minus allowable expenses, or minus the £1,000 trading allowance if that’s higher.
- Income Tax on profit (plus any other income) at 20%, 40% and 45% above the £12,570 Personal Allowance, or Scottish rates if you live in Scotland.
- Class 4 National Insurance: 6% on profits between £12,570 and £50,270, and 2% above.
Class 2 National Insurance no longer has to be paid. If your profits are £7,105 or more it’s treated as paid, so you still build up State Pension entitlement.
Worked examples
A freelancer with £45,000 turnover
After £6,000 of expenses, profit is £39,000. Income Tax is £5,286 and Class 4 NI is £1,585.80, a total of £6,871.80. Setting aside about £573 a month covers it.
A sole trader on £60,000 profit
Income Tax is £11,432 and Class 4 NI £2,456.60, so £13,888.60 in total, about 23% of profit.
Payments on account
If your bill is more than £1,000, HMRC usually asks for advance payments towards next year: half on 31 January and half on 31 July. In your first year this can mean paying around 150% of a year’s bill in one January.
Frequently asked questions
How much tax do I pay when self-employed?
Income Tax at 20%, 40% or 45% on profit above £12,570, plus Class 4 NI at 6% between £12,570 and £50,270 and 2% above.
What expenses can I claim?
Costs you have only for your business, such as equipment, stock, travel, a share of phone and internet, and professional fees. Personal spending can’t be claimed.
What is the trading allowance?
You can earn up to £1,000 a year from self-employment tax-free, or deduct £1,000 instead of actual expenses.
When is the deadline?
Online Self Assessment returns and payment are due by 31 January after the end of the tax year.
Sources
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