Your Self-Employment Details
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 pay two types of NI:
- Class 2 NI: £3.45 per week (£179.40/year) if your profit exceeds £12,570
- 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 2025/26
- 31 January 2027: First Payment on Account for 2025/26 + balancing payment for 2024/25
- 31 July 2027: Second Payment on Account for 2025/26
- 31 January 2028: Balancing payment for 2025/26 + first Payment on Account for 2026/27
Self-Employed NI Rates 2025/26
| NI Class | Threshold / Band | Rate | Annual Cost |
|---|---|---|---|
| Class 2 | Profits above £12,570 | £3.45/week | £179.40/year |
| 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 2025/26
| 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, plus Class 2 NI (£3.45/week if profit exceeds £12,570) and Class 4 NI (6% on profits between £12,570 and £50,270, plus 2% above £50,270).
Class 2 NI is a flat-rate contribution paid by self-employed people. For 2025/26, it costs £3.45 per week (£179.40 per year) and is payable if your profits exceed £12,570. It helps you qualify for the State Pension and certain benefits like Maternity Allowance.
Class 4 NI is a profit-based contribution for the self-employed. For 2025/26, 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.
Yes. If you contribute to a personal pension, the contributions reduce your taxable profit for Income Tax purposes. This is one of the most tax-efficient ways for self-employed people to reduce their tax bill. The annual allowance for pension contributions is £60,000 for 2025/26.
For the 2025/26 tax year (ending 5 April 2026), the online filing deadline is 31 January 2027. The paper filing deadline is 31 October 2026. You must also pay any tax owed by 31 January 2027. Late filing incurs an automatic £100 penalty.