How much tax do self-employed people pay in the UK?

Self-employed people pay Income Tax on profits above the £12,570 Personal Allowance (20%, 40% or 45% by band) plus Class 4 National Insurance at 6% on profits between £12,570 and £50,270, and 2% above. On a £40,000 profit, the total bill is approximately £7,132.

Do self-employed people pay National Insurance?

Yes, but at lower rates than employees. Self-employed people pay Class 4 NI at 6% on profits between £12,570 and £50,270, and 2% above. They do not pay the higher employee Class 1 rate of 8%. Voluntary Class 2 contributions (£3.45/week) can be made to build State Pension qualifying years.

When do I need to file a Self Assessment return?

Register with HMRC by 5 October in your second year of self-employment. File online by 31 January each year (for the previous tax year ending 5 April). Pay any tax owed by 31 January. If your bill exceeds £1,000, you'll also make Payments on Account in January and July.

Self-Employed Tax Guide UK 2026/27 | Income Tax & NI

As a self-employed person in the UK you pay Income Tax on profits above the Personal Allowance, plus Class 4 National Insurance on profits above £12,570 — typically through a Self Assessment tax return filed each January.

What You Pay: Income Tax + Class 4 NI

ComponentRateOn

Income Tax (basic rate)20%Profits £12,571–£50,270

Income Tax (higher rate)40%Profits £50,271–£125,140

Income Tax (additional)45%Profits above £125,140

Class 4 NI6%Profits £12,570–£50,270

Class 4 NI (upper)2%Profits above £50,270

Example: £40,000 Profit

Taxable profit: £40,000 − £12,570 = £27,430
Income Tax (20%): £5,486
Class 4 NI (6%): £1,646
Total tax bill: £7,132 (effective rate 17.8%)
Net take-home: £32,868/year (£2,739/month)

Allowable Expenses

You pay tax on profits, not turnover. Deduct legitimate business expenses before calculating tax:

Office costs (home working: £6/week flat rate, or actual costs with records)
Travel and vehicle costs (business journeys only)
Equipment and tools
Professional fees (accountant, legal)
Marketing and website costs
Stock and materials

Payments on Account

If your tax bill exceeds £1,000, HMRC requires you to make advance payments for the next year — called Payments on Account — due 31 January and 31 July each year. Each payment is 50% of your previous year's bill. This catches many first-year self-employed people off guard: in January of your second year, you pay your first-year bill plus 50% upfront toward year two.

Register as self-employed with HMRC as soon as you start earning, even if you don't expect to earn much. Penalties apply for late registration. Register at gov.uk/register-for-self-assessment.

Calculate your take-home pay

Use PayKeep's free calculator for your exact figures — pension, student loan, tax code and all.

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The Complete Self-Employed Tax Guide UK 2026/27