How is UK self-employed income tax calculated?

Profit (plus any other income) is reduced by the personal allowance, then taxed in bands: a basic rate up to the basic-rate limit, a higher rate above it, and an additional rate at the top. The personal allowance itself tapers away once income exceeds £100,000, which this tool models.

What is the difference between Class 2 and Class 4 NI?

Class 4 NI is a percentage of profit between a lower and upper threshold, plus a small rate above the upper limit. Class 2 is a flat weekly amount payable once profit exceeds the small-profits threshold. Both are collected through Self Assessment alongside income tax.

What are payments on account?

If your Self Assessment bill (excluding Class 2) is over £1,000 and mostly untaxed at source, HMRC asks for two advance payments toward next year — each 50% of this year's bill — due 31 January and 31 July. The tool shows these so you can budget for them.

Does the personal allowance always apply?

It applies in full up to £100,000 of income, then reduces by £1 for every £2 above that, disappearing entirely around £125,140. The calculator applies this taper, so high earners correctly see a higher effective tax rate on the affected band.

Is this an exact HMRC calculation?

It is a close estimate using standard thresholds and rates, suitable for budgeting. It does not handle Scottish rate bands, student loans, pension relief, dividends, or the marriage allowance. Use it to plan, then rely on your Self Assessment return for the exact figure.

UK Self-Employed Tax & NI Calculator

The UK Self-Employed Tax & NI Calculator estimates the full Self Assessment bill for a sole trader: income tax, Class 2 and Class 4 National Insurance, and the payments on account HMRC will ask for. Enter your profit and the tool applies the personal allowance, the income-tax bands, and the NI thresholds in the right order.

How it works

Your taxable profit (turnover minus allowable expenses), added to any other income, is first reduced by the personal allowance. The remainder is taxed in bands — a basic rate, then a higher rate, then an additional rate at the top. The allowance tapers away above £100,000 (£1 lost per £2 of income), so very high earners lose it entirely.

National Insurance is separate. Class 4 is a percentage of profit between the lower and upper profits limits, plus a small rate above the upper limit. Class 2 is a flat weekly charge once profit passes the small-profits threshold:

income tax = sum over bands of (income in band × band rate)
Class 4 NI = (profit in main band × main rate) + (profit above upper × upper rate)
Class 2 NI = weekly rate × 52  (if profit > small-profits threshold)

Example and notes

A sole trader with £45,000 profit and no other income: after a £12,570 allowance, £32,430 is taxed at the basic 20% rate = £6,486. Class 4 applies its main rate to profit between the lower limit and £45,000, and Class 2 adds the flat weekly charge. If the resulting bill exceeds £1,000, two payments on account of half the bill each are scheduled for January and July.

Notes: this uses standard UK (non-Scottish) thresholds and ignores student loans, pensions and dividends. It is a planning estimate, not your final HMRC calculation.