Self-Employed Tax & NI Calculator (UK)
Calculate the income tax and National Insurance you owe as a self-employed person or sole trader. Based on 2026/27 rates for Class 2 and Class 4 NI.
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Self-Employment Tax Guide 2026/27
What's the key thing to understand about Self-Employed National Insurance?
Class 2 NI: £3.45 per week (£179.40/year) if profits exceed £12,570. This is paid on self-assessment and counts toward state pension and contributory benefits. Class 4 NI: 9% on profits between £12,570–£50,270; 2% above £50,270. Unlike employee NI, there is no employer contribution for the self-employed, making the effective NI rate lower for the same gross income but providing fewer benefits coverage. From April 2024, Class 2 NI is collected via self-assessment rather than direct debit.
What do I need to know about Payment on Account?
Self-employed people pay income tax via self-assessment in two payments on account: 31 January (50% of prior year's bill, plus any balancing payment) and 31 July (50% of prior year's bill). In the first year of self-employment, no payments on account are due until January following the first tax year — this can create a large first-year bill. Budget 25–30% of profit monthly for tax and NI, or use a separate savings account to ring-fence tax funds as you earn.
What's the key thing to understand about Allowable Expenses?
Genuine business expenses reduce your taxable profit. Fully deductible: accountancy fees, business insurance, tools and equipment, professional subscriptions, travel to client sites (not commuting), marketing and website costs, software and subscriptions, office supplies. Partially deductible: home office (actual costs or HMRC's £6/week flat rate), phone and broadband (business proportion), car (actual costs or HMRC mileage rate of 45p/mile for first 10,000 miles). Capital equipment (computers, Keeping accurate records of income and expenses throughout the year makes this calculation far easier — QuickBooks is built for exactly this, letting self-employed people track income, expenses and VAT from one place rather than reconstructing it all at tax return time.
What's the key thing to understand about Tax-Efficient Structures?
For profits regularly above £50,000–£60,000, incorporating as a limited company often becomes tax-efficient. As a director-shareholder, you can draw a small salary (to maintain NI record) and take dividends taxed at lower rates (10.75% basic rate). However, corporation tax on profits (25% above £50,000), additional accounting costs (£800–2,000/year), and loss of employment-related flexibility must be weighed. Seek accountant advice at this threshold — the breakeven varies with individual circumst