How much tax should I set aside if I'm self-employed?

UK 2026/27 · Last reviewed 23 October 2026 · Estimates only, not tax advice

Short answer: most UK sole traders with a profit between about £25,000 and £50,000 need to set aside roughly 13–20% of their profit for Income Tax and Class 4 National Insurance. Higher earners need more, and you may need extra in your first year because of payments on account. Setting aside 25–30% is a safe, simple buffer for most people.

Why there's no single percentage

Tax is charged on profit (turnover minus allowable expenses), not on what you invoice. And it's progressive: the first £12,570 is usually tax-free, then rates step up. So the share you need to keep back rises as your profit grows. Your other income, such as a PAYE job, also changes which bands your profit falls into.

Worked examples for 2026/27

Profit only, no other income, England, Wales or Northern Ireland rates, no pension contributions.

Figures come straight from the same engine as our self-employed tax calculator.

If you also have a job (side income)

If your salary already uses your Personal Allowance, every pound of self-employed profit is taxed from the first pound. For example, with a £30,000 salary and £10,000 of side profit, you'd owe about £2,000 on that profit — around 20.0%, or £167 a month. If your side profit pushes you into the higher-rate band, set aside closer to 40–50% of the extra.

Don't forget payments on account

If your Self Assessment bill is over £1,000, HMRC usually asks for two advance payments towards next year, each half of this year's bill, due 31 January and 31 July. In your first year this can mean paying the whole year's bill plus 50% more on the same January date. For a £35,000 profit, that first January payment could be around £8,748. If you're new, save an extra half again during your first year.

A simple system that works

• Open a separate savings account just for tax.
• Each time you're paid, move your percentage across straight away.
• Recheck your figure every quarter as your profit changes — the calculator takes a minute.
• Keep records of expenses; every allowable £100 typically saves £26–£46 in tax and NI.
• Anything left after paying HMRC is a bonus, not a loss.

What this guide doesn't cover

These examples use England, Wales & NI rates — if you live in Scotland, choose Scotland in the self-employed tax calculator for your own figures. Student loan repayments, VAT, dividends and savings interest are not included. Each of these can increase what you need to keep back. See GOV.UK self-employed NI rates and payments on account for official guidance.