Self-Employed Tax Calculator: How to Estimate Your Tax Bill
Calculate your income tax, National Insurance, and take-home profit as a sole trader or freelancer.
💼 Self-Employed Tax Overview
As a self-employed person, you pay tax on your profits (income minus expenses) rather than your total income. This guide explains how to calculate your tax liability.
Income Tax
Same rates as employed
20%, 40%, 45%
Class 2 NI
Fixed weekly amount
£3.45/week
Class 4 NI
Percentage of profits
9% + 2%
How Self-Employed Tax is Calculated
Step 1: Calculate Your Profits
Formula:
Profits = Total Income - Allowable Expenses
Step 2: Income Tax Calculation
| Tax Band | Profit Range | Rate |
|---|---|---|
| Personal Allowance | £0 - £12,570 | 0% |
| Basic Rate | £12,571 - £50,270 | 20% |
| Higher Rate | £50,271 - £125,140 | 40% |
| Additional Rate | £125,140+ | 45% |
Step 3: National Insurance
Class 2 National Insurance
- • £3.45 per week (£179.40 per year)
- • Only if profits exceed £6,515
- • Can be paid voluntarily if below threshold
Class 4 National Insurance
- • 9% on profits £12,570 - £50,270
- • 2% on profits above £50,270
- • No NI on first £12,570 of profits
Example Calculation
Freelancer with £40,000 Annual Profits
Income Tax Calculation:
• Personal Allowance: £12,570 (0% tax)
• Basic Rate: £27,430 × 20% = £5,486
• Total Income Tax: £5,486
National Insurance:
• Class 2: £179.40 per year
• Class 4: £27,430 × 9% = £2,468.70
• Total NI: £2,648.10
Summary:
• Gross Profits: £40,000
• Income Tax: £5,486
• National Insurance: £2,648
• Take-home: £31,866
Allowable Expenses
✅ Deductible Expenses
- • Office costs (stationery, phone bills)
- • Travel costs (fuel, parking, public transport)
- • Clothing (uniforms, safety equipment)
- • Staff costs (wages, salaries, subcontractors)
- • Premises costs (rent, rates, utilities)
- • Reselling goods (stock, materials)
- • Financial costs (insurance, bank charges)
- • Professional fees (accountants, legal)
- • Marketing and advertising
- • Training and development
❌ Non-Deductible Expenses
- • Personal expenses
- • Entertainment (unless client entertainment)
- • Fines and penalties
- • Personal clothing
- • Commuting costs (home to permanent workplace)
- • Personal phone calls
- • Personal use of business assets
Home Office Expenses
Simplified Expenses
Flat Rate Method:
- • 25-50 hours/month: £10/month
- • 51-100 hours/month: £18/month
- • 101+ hours/month: £26/month
No receipts needed!
Actual Costs Method
Calculate proportion of:
- • Rent or mortgage interest
- • Council tax
- • Utilities (gas, electricity, water)
- • Internet and phone
- • Insurance
Receipts required!
Tax Deadlines & Payments
Self Assessment Deadlines
Paper Returns:
31 October (following tax year)
Online Returns:
31 January (following tax year)
Payment Deadlines
31 January:
Balance of tax due for previous year + First payment on account
31 July:
Second payment on account
Tax Planning Tips
💡 Maximize Your Deductions
- • Keep detailed records of all business expenses
- • Use simplified expenses for home office if eligible
- • Claim for training and professional development
- • Consider timing of large purchases
- • Use annual investment allowance for equipment
📊 Planning for Payments
- • Set aside 25-30% of profits for tax
- • Use a separate business bank account
- • Plan for payments on account
- • Consider making voluntary Class 2 NI payments
- • Use tax-efficient savings accounts
Calculate Your Self-Employed Tax
Use our free calculator to estimate your tax liability and take-home profit
Start Calculating →