Self-Employed Tax: What to Pay, When to Pay, and How to Reduce It
Being self-employed means you are responsible for calculating and paying your own tax, rather than having it deducted automatically through PAYE. The tax you pay as a self-employed person consists of two elements: Income Tax on your profits and National Insurance contributions. Getting both right — and paying on time — is essential to avoiding HMRC penalties.
What tax does a self-employed person pay?
Self-employed people pay:
- Income Tax on profits above the Personal Allowance (£12,570 in 2025-26): 20% on £12,571–£50,270; 40% on £50,271–£125,140; 45% above that
- Class 4 National Insurance: 6% on profits between £12,570 and £50,270; 2% on profits above £50,270
- Class 2 National Insurance: effectively abolished from April 2024 for those with profits above the Small Profits Threshold (£6,725). Those below this threshold can pay voluntarily to protect State Pension entitlement.
Self-employed tax at common profit levels 2025-26
| Annual profit | Income Tax | Class 4 NI | Total tax | Take-home |
|---|---|---|---|---|
| £15,000 | £486 | £147 | £633 | £14,367 |
| £20,000 | £1,486 | £561 | £2,047 | £17,953 |
| £25,000 | £2,486 | £1,001 | £3,487 | £21,513 |
| £30,000 | £3,486 | £1,394 | £4,880 | £25,120 |
| £40,000 | £5,486 | £2,194 | £7,680 | £32,320 |
| £50,000 | £7,486 | £2,994 | £10,480 | £39,520 |
| £60,000 | £11,432 | £3,194 | £14,626 | £45,374 |
Self Assessment deadlines — never miss these
| Deadline | What is due |
|---|---|
| 5 October | Register for Self Assessment if this is your first year |
| 31 October | File your paper tax return for the previous tax year |
| 31 January | File online return AND pay the balancing payment for previous year PLUS first payment on account |
| 31 July | Second payment on account (if applicable) |
Payments on account are advance payments toward next year's tax bill, based on the previous year. They apply if your Self Assessment bill is over £1,000. This means in January you may owe the previous year's balance plus 50% of the estimate for the current year.
How to reduce your self-employed tax bill
- Claim all allowable expenses: Business mileage, home office costs, professional subscriptions, equipment, software, and advertising are all deductible. Keep receipts.
- Use the trading allowance: If your income is below £1,000, you may not need to file a return at all. Above that, the £1,000 trading allowance can still be deducted from total income before calculating profit.
- Make pension contributions: Self-employed pension contributions reduce your taxable profit. A £3,000 pension contribution saves £600 in income tax at the basic rate.
- Use your capital allowances: Major equipment purchases can often be deducted in full in the year of purchase via the Annual Investment Allowance (up to £1 million).
Frequently asked questions
How much tax do I pay as self-employed?
Income Tax at the same rates as employees (20%/40%/45%) plus Class 4 NI at 6% on profits between £12,570 and £50,270. On a £30,000 profit, total tax is approximately £4,880 — taking home £25,120.
When do I pay self-employed tax?
By 31 January each year for the previous tax year's bill, and by 31 July for the second payment on account. The tax year runs April to April.
Do I need to pay National Insurance if self-employed?
You pay Class 4 NI (6% on profits between £12,570 and £50,270). Class 2 was effectively abolished from April 2024 for most self-employed people, though you can pay voluntarily to protect State Pension rights if profits are below £6,725.