How much tax do you pay when you're self-employed?

When you're self-employed, you pay tax on your profit: your income minus allowable business expenses. There are two parts: income tax and Class 4 National Insurance.

Income tax

Most people get a £12,570 Personal Allowance tax-free. In England, Wales and Northern Ireland, the next £37,700 is taxed at 20%, then 40% up to £125,140, and 45% above that. The allowance shrinks by £1 for every £2 of income over £100,000.

Scotland has six bands, from 19% to 48%. Our calculators let you choose Scotland so the right bands are used.

Class 4 National Insurance

You pay 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270.

Class 2 National Insurance is no longer compulsory. If your profits are below the small profits threshold, you can choose to pay it to keep building your State Pension.

Worked example

A sole trader in England with £30,000 profit and no other income:

• Income tax: 20% of £17,430 = £3,486
• Class 4 NI: 6% of £17,430 = £1,045.80
• Take-home: about £25,468

Try your own figures

Use the self-employed tax calculator. Remember to set money aside: your tax is usually due by 31 January, often with payments on account.