Self Employed Tax Explained: What You Owe and When
Learn how income tax, Class 2 and Class 4 NI, expenses, Self Assessment, and payments on account work.
Open Self Employed Tax CalculatorTax is based on profit
Self employed tax starts with profit, not turnover. Profit is your business income minus allowable expenses. Use the AtlasPeak Self Employed Tax Calculator near the top of your planning so you can turn income, expenses and any PAYE earnings into a rough tax bill.
Allowable expenses must be wholly and exclusively for business. Common examples include business mileage, software, professional fees, materials, a proportion of home office costs and some phone or internet costs.
Income tax and National Insurance
After expenses, taxable profit is added to any other income. Income tax is then calculated using the personal allowance and tax bands. If you also have PAYE income, that income may use some or all of your personal allowance before self employed profit is taxed.
Self employed people may also pay Class 2 and Class 4 National Insurance. In this calculator, Class 2 is a weekly flat amount and Class 4 is a percentage of profits above the lower profits limit, with a lower rate above the upper limit.
Payments on account
Payments on account are advance payments towards the next tax bill. They are usually due on 31 January and 31 July, and each payment is half of the previous year's tax bill. They can surprise new sole traders because the first January payment may include the balancing payment for the old year plus the first payment on account for the new year.
If profits fall, you may be able to reduce payments on account, but reducing them too far can lead to interest. Keeping money aside monthly is usually safer than waiting for the Self Assessment deadline.
Deadlines and registration
You normally need to register for Self Assessment if you become self employed and earn more than the trading allowance. The main online tax return and payment deadline is 31 January after the end of the tax year. A second payment on account may be due on 31 July.
Use the calculator again whenever income or expenses change. It is a planning estimate, not a substitute for accounting records or professional advice.
FAQ
When do I need to register as self employed?
You normally register for Self Assessment if you trade as self employed and earn above the trading allowance.
What expenses can I claim?
You can usually claim costs that are wholly and exclusively for business, such as materials, software, mileage and professional fees.
What are payments on account?
Payments on account are advance payments towards next year's tax bill, usually due on 31 January and 31 July.
Do I pay NI if self employed?
Self employed people may pay Class 2 and Class 4 National Insurance depending on profits.
Try the calculator
Put the guide into practice with the Self Employed Tax Calculator and check your own numbers.
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Last updated: July 2026