Self-employed tax calculator

Where you liveScottish Income Tax rates apply if your main home is in Scotland.

Turnover for the yearAll the money your business took in, before any costs.GBP

Allowable expensesRunning costs such as stock, travel, phone and software. Ignored with the trading allowance.GBP

Use the £1,000 trading allowance instead of expensesWorth it only when your real expenses are under £1,000.

Pay voluntary Class 2 if profit is below the small profits thresholdKeeps the year on your State Pension record for £3.65 a week (£3.50 in 2025/26).

Tax and National Insurance to pay

£5,832

Effective rate 16.7 %

Allowable expenses-£5,000
Taxable profit£35,000
Personal Allowance-£12,570
Income Tax20 %−£4,486
Class 4 National Insurance6 %−£1,346
Class 2: treated as paid, nothing to pay£0
Each payment on account for next year (31 January and 31 July)£2,916
Profit after tax and National Insurance£29,168

An estimate under the rules for the chosen year, for typical cases. It is not tax advice: check the result with the tax office or an adviser before you file.

How it is calculated

Your taxable profit is your turnover minus allowable expenses. If your expenses are small, you can deduct the £1,000 trading allowance instead. If your turnover is £1,000 or less, you do not need to pay tax on it.

Income Tax is charged on profit above the Personal Allowance of £12,570. In England, Wales and Northern Ireland the rates are 20 %, 40 % and 45 %. Scotland has six bands from 19 % to 48 %. The allowance shrinks by £1 for every £2 of income over £100,000.

Class 4 National Insurance is 6 % on profit between £12,570 and £50,270 and 2 % above that. Class 2 is no longer charged. If your profit is at least the small profits threshold, it counts as paid for your State Pension record. Below it, you can pay it voluntarily.

If your bill is £1,000 or more, HMRC usually asks for two payments on account towards next year. Each is half of this year's Income Tax and Class 4, due on 31 January and 31 July.

Your self-employed profit is your only income for the year.
Profit is turnover minus allowable expenses, or minus the £1,000 trading allowance if you choose it. You cannot use both.
Turnover of £1,000 or less is tax free automatically, unless your expenses are higher.
Capital allowances, losses, pension contributions and Gift Aid are not included.
Class 2 National Insurance is treated as paid when profit is at or above the small profits threshold (£6,845 in 2025/26, £7,105 in 2026/27).
Payments on account are worked out as if next year looks like this year. They are not due if the bill is under £1,000.
Student loan repayments through Self Assessment are not included.

Questions

Do I still pay Class 2 National Insurance?

No. Since April 2024 Class 2 is not charged. With profit at or above the small profits threshold you get the qualifying year anyway. Below it you can pay £3.65 a week in 2026/27 (£3.50 in 2025/26) to protect your record.

Should I use the trading allowance or claim expenses?

Use whichever is bigger. If your real expenses are under £1,000, the allowance gives a lower profit. You cannot claim both on the same income.

What are payments on account?

They are advance payments towards next year's bill. Each one is half of this year's Income Tax and Class 4. If you paid too much, it is taken off the balancing payment or refunded.

Why is my first January bill so large?

In your first year you pay the whole bill for that year plus the first payment on account for the next year, both on 31 January.

When do I need to register as self-employed?

Tell HMRC by 5 October after the end of the tax year in which you started, for example by 5 October 2027 for income in 2026/27.

Sources

Now keep it on track Set the result as a budget in Spendee and see each month how much is left.

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