Why a flat 20% or 30% rule can mislead
Self-employed people pay tax on profit — turnover minus allowable expenses — and the first £12,570.00 is usually tax-free. So the share you need to save grows with profit. Applying 30% to turnover can lock away far more than needed; 20% can be too little once you reach the higher rate. This calculator uses the same tested engine as our self-employed tax calculator to estimate the actual bill for your forecast.
Worked examples (2026/27)
England, Wales or Northern Ireland, no other income or pension, no buffer. Calculated live by the same engine as the calculator above.
| Example | Turnover / profit | Tax & NI | Per month | % of profit | % of turnover |
|---|---|---|---|---|---|
| Part-time side business | £15,000.00 / £12,000.00 | £0.00 | £0.00 | 0.0% | 0.0% |
| Basic-rate sole trader | £40,000.00 / £34,000.00 | £5,571.80 | £464.32 | 16.4% | 13.9% |
| Higher-rate sole trader | £75,000.00 / £65,000.00 | £15,988.60 | £1,332.38 | 24.6% | 21.3% |
| Profit in the allowance taper | £125,000.00 / £115,000.00 | £39,988.60 | £3,332.38 | 34.8% | 32.0% |
The percentage rises steeply in the taper example because the Personal Allowance is withdrawn by £1 for every £2 of adjusted net income over £100,000.00.
How the reserve is calculated
- Profit = expected turnover − allowable expenses (never below zero; losses are not relieved here).
- Income Tax attributable to the business = tax on all entered income minus tax on your other income alone, using the selected year and region's bands, Personal Allowance taper and any gross relief-at-source pension contributions.
- Class 4 NI is 6% on profit between £12,570.00 and £50,270.00, and 2% above.
- Class 2: at profit of £7,105.00 or more it is treated as paid with no charge; below that, voluntary contributions of £3.65 a week are included only if you tick the option.
- Reserve = estimated tax and NI × (1 + optional buffer). Monthly = ÷ 12, weekly = ÷ 52. Percentages are shown separately against turnover and profit.
Payments on account and cash flow
Your annual liability and when you pay it are different things. HMRC normally asks for payments on account when your last Self Assessment bill was more than £1,000, unless at least 80% of your tax was already collected at source. Each is normally half of the previous year's bill, due 31 January and 31 July, followed by a balancing payment the next 31 January.
Example: a 2026/27 profit of £34,000.00 gives an estimated Self Assessment bill of £5,571.80. If you had no payments on account for 2026/27, 31 January 2028 could need £8,357.70 — the full balance plus a first payment on account of £2,785.90 for the next year — and 31 July 2028 another £2,785.90. The calculator assumes next year's payments are based on this year's estimate; you can ask HMRC to reduce them if you expect lower profits. Enter payments on account you already owe for 2026/27 to see the balancing payment instead.
Other income, pensions and Scotland
A salary or pension taxed through PAYE uses up your Personal Allowance and basic-rate band first, so more of your business profit is taxed at higher rates. Enter it as other non-savings income; its own tax is not added to your reserve. Relief-at-source pension contributions extend your basic- and higher-rate bands and reduce adjusted net income for the allowance taper; enter the gross amount. Scottish taxpayers pay Scottish Income Tax rates on non-savings income, while Class 4 NI is the same UK-wide.
What this calculator leaves out
Student loan and postgraduate loan repayments, the High Income Child Benefit Charge, tax on savings, dividends and capital gains, property income (use the landlord tax calculator), loss relief, the trading allowance, partnerships, part-year or age-related NI, Marriage Allowance, unpaid earlier tax, refunds and HMRC interest or penalties. CIS deductions already taken are handled by the CIS tax rebate calculator. Figures are a full-year forecast, not a final tax return.
Related tools
- Self-employed tax calculator — full take-home and band breakdown.
- Hourly and day rate calculator — price your work with tax built in.
- MTD Income Tax checker — when quarterly digital updates start for you.
- VAT threshold calculator — check your rolling 12-month turnover.
- Sole trader vs limited company calculator.
- Guide: how much tax to set aside.
Frequently asked questions
How much should I put aside for tax if I'm self-employed?
It depends on your profit, not a fixed percentage. With no other income, profit up to the Personal Allowance usually needs nothing for Income Tax or Class 4 NI; a basic-rate sole trader with profit between £20,000 and £50,000 typically needs roughly 10–20% of profit; higher earners need more. Enter your forecast to get an amount based on the selected year's rates.
Should I save 20% or 30% of my income for tax?
Those rules of thumb can be too high at low profits and too low for higher earners, and they are often applied to turnover rather than profit. This calculator works out the estimated liability on profit and lets you add an optional 5% or 10% buffer on top.
What are payments on account?
Advance payments towards your next tax bill, normally each half of the previous year's Self Assessment bill, due 31 January and 31 July. They usually apply when your last bill was over £1,000 unless at least 80% of your tax was already collected at source, such as through PAYE. They change when money is due, not how much tax you owe.
Why is my first January bill so large?
In your first year with payments on account, the 31 January payment can include the full balancing payment for the year just ended plus the first payment on account for the current year — up to 150% of one year's bill in a single payment.
Is the safety buffer extra tax?
No. The buffer is optional savings to protect against higher-than-expected profit or forecast errors. It is not owed to HMRC and does not change the tax estimate.
Does this include student loans or the Child Benefit charge?
No. Student loan repayments, the High Income Child Benefit Charge, tax on savings and dividends, capital gains and property income rules are not included. Add your own allowance for them if they apply.
I already pay PAYE on a job. What should I set aside?
Enter your salary as other income. It uses up your Personal Allowance and bands, so the tax on your business profit is higher. The tax on the salary itself is assumed to be collected by your employer and is not added to your reserve.
Official sources and review
Prepared by SoloCalc using the site's shared tested tax engine. Rules last checked 23 October 2026 against the official pages below. This is a source-based review, not accountant certification or HMRC approval. Guidance only, not tax advice.
- Income Tax rates and Personal Allowance
- Scottish Income Tax
- Self-employed National Insurance rates
- Payments on account
- Self Assessment payment deadlines
- Allowable expenses if you're self-employed
- Pension tax relief
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