Your Self-Employment Details
Gross includes the provider’s 20% top-up; take-home deducts your 80% net payment. Tax bands widen and adjusted net income falls. Uses the standard allowance and no other income; PAYE codes do not determine trading-profit tax. Class 4 NI and student loans use profit before pension. Annual allowance charges are excluded.
Your Tax Breakdown
Figures are estimates based on HMRC rates. They do not account for other income sources, marriage allowance, or benefits in kind.
How Self-Employed Tax Works
If you work for yourself as a sole trader or freelancer, you are responsible for calculating and paying your own tax through HMRC's Self Assessment system. Your tax bill is based on your trading profit, which is your turnover minus allowable business expenses.
Step 1: Calculate Your Profit
Deduct all allowable business expenses from your total turnover. Common expenses include office costs, travel, stock, advertising, professional fees, and a proportion of working-from-home costs. Alternatively, you can use the £1,000 trading allowance if your expenses are low.
Step 2: Income Tax
Income Tax is calculated on your profit using the same bands as employed workers:
- Personal Allowance: £0 – £12,570 at 0%
- Basic Rate: £12,571 – £50,270 at 20%
- Higher Rate: £50,271 – £125,140 at 40%
- Additional Rate: Over £125,140 at 45%
Your Personal Allowance reduces by £1 for every £2 of income above £100,000, reaching zero at £125,140.
Step 3: National Insurance
Self-employed people may have Class 4 NI to pay. Compulsory Class 2 NI has been abolished.
- Class 2 NI: If your profits are at least £7,105, you are treated as having paid Class 2 at no cost to protect your National Insurance record. Below this threshold, you may choose to pay voluntary Class 2 contributions.
- Class 4 NI: 6% on profits between £12,570 and £50,270, plus 2% on profits above £50,270
Step 4: Student Loan (if applicable)
Student loan repayments are calculated on profit above the relevant threshold, at 9% for Plans 1, 2 and 4, or 6% for Postgraduate loans.
Payment on Account Explained
If your Self Assessment tax bill is more than £1,000, HMRC will usually ask you to make Payments on Account. This means you pay your tax in advance, in two instalments:
Example Timeline for 2026/27
- 31 January 2027: First Payment on Account for 2026/27 + balancing payment for 2025/26
- 31 July 2027: Second Payment on Account for 2026/27
- 31 January 2028: Balancing payment for 2026/27 + first Payment on Account for 2027/28
Self-Employed NI Rates 2026/27
| NI Class | Threshold / Band | Rate | Annual Cost |
|---|---|---|---|
| Class 2 | Profits ≥ £7,105 (Small Profits Threshold) | Treated as Paid | £0.00 (NI credit provided) |
| Class 4 — Main | £12,570 – £50,270 | 6% | Up to £2,262 |
| Class 4 — Upper | Above £50,270 | 2% | Varies |
Source: HMRC — Self-employed National Insurance rates
Income Tax Rates 2026/27
| Band | Taxable Income | 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% |
Worked Examples
Example 1: Freelancer — £30,000 Profit
Example 2: Consultant — £60,000 Profit
Example 3: Trader — £100,000 Profit
Frequently Asked Questions
Self-employed tax is calculated on your trading profit (turnover minus allowable expenses). You pay Income Tax using the same bands as employees and Class 4 NI (6% on profits between £12,570 and £50,270, plus 2% above £50,270). Compulsory Class 2 NI has been abolished; profits of £7,105 or more are treated as having paid Class 2 at no cost.
Class 2 NI is a flat-rate contribution paid by self-employed people. Under current HMRC legislation, compulsory Class 2 NI has been abolished. If your profits are £7,105 or more, you are automatically treated as having paid Class 2 at £0 cost to protect your State Pension and benefit entitlement.
Class 4 NI is a profit-based contribution for the self-employed. For 2026/27, you pay 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270. It is calculated and paid through your Self Assessment tax return.
Payment on Account is HMRC's system of advance tax payments. If your tax bill exceeds £1,000, you make two advance payments (each 50% of the previous year's bill) on 31 January and 31 July, plus a balancing payment. This means in your first year you may pay up to 150% of your normal bill.
Personal pensions do not reduce trading profits. Gross contributions reduce adjusted net income and extend tax bands; the provider adds basic-rate relief. This calculator deducts your net payment and estimates the remaining tax relief.
For the 2026/27 tax year (ending 5 April 2027), the online filing deadline is 31 January 2028. The paper filing deadline is 31 October 2027. You must also pay any tax owed by 31 January 2028. Late filing incurs an automatic £100 penalty.