How much tax to set aside when you're self-employed
The short answer for most sole traders in England, Wales and Northern Ireland: put aside about a quarter of every pound of profit above £12,570, and a bit more in your first year of payments on account. The longer answer depends on how much you make, whether you have a job as well, and where you live. The figures below are the same for the 2025/26 tax year (the return due by 31 January 2027) and 2026/27, because the thresholds are frozen.
Why “about a quarter”
On profit above the £12,570 personal allowance, a basic-rate sole trader pays 20% income tax and 6% Class 4 National Insurance: 26p in every pound. Below £12,570 there is nothing to pay. So the share of your whole profit that goes in tax starts low and rises towards 26% as profit grows, then climbs faster once profit passes £50,270, where income tax goes to 40% and Class 4 drops to 2%.
| Profit for the year | Tax and NI | Set aside a month | Share of profit |
|---|---|---|---|
| £15,000 | £631.80 | £52.65 | 4.2% |
| £25,000 | £3,231.80 | £269.32 | 12.9% |
| £40,000 | £7,131.80 | £594.32 | 17.8% |
| £60,000 | £13,888.60 | £1,157.38 | 23.1% |
Profit is what you took in minus allowable expenses (or minus the £1,000 trading allowance, if that's better). The figures leave out student loan repayments, the High Income Child Benefit Charge and pension contributions, which can each move the bill a fair way. The self-employed tax calculator adds them in.
The January surprise: payments on account
Once your Self Assessment bill is £1,000 or more, and less than 80% of your tax is already taken at source, HMRC asks for payments on account: two advance payments towards next year, each half of this year's bill, due on 31 January and 31 July. In the first year that happens, January carries this year's whole bill and half of next year's. On £40,000 of profit, that's £7,131.80 plus £3,565.90: £10,697.70 on 31 January, then another £3,565.90 on 31 July.
So in the year your bill first passes £1,000, set aside about one and a half times the figure in the table. After that, if your profit holds steady, the payments on account cover most of each year's bill as you go, and January is mostly the second half of a normal year. If you expect to earn less, you can ask HMRC to reduce them.
If you have a job as well
Your salary uses up the personal allowance first, so the profit from your side business is taxed from the band your salary leaves off. Payroll has already taken the tax and Class 1 NI on the salary; Self Assessment collects the tax on the profit, plus Class 4 if the profit itself is over £12,570.
| Salary and profit | Due through Self Assessment | Share of profit |
|---|---|---|
| £30,000 salary, £10,000 profit | £2,000.00 | 20% |
| £45,000 salary, £10,000 profit | £2,946.00 | 29.5% |
| £30,000 salary, £20,000 profit | £4,445.80 | 22.2% |
On a £45,000 salary, the first £5,270 of profit is taxed at 20% and the rest at 40%, which is why a side business can take a bigger share than a full-time one. Class 4 is worked out on the profit alone, so your salary doesn't use up its £12,570 threshold.
If you owe less than £3,000, already pay tax through PAYE and file online by 30 December, HMRC can usually collect the bill through your tax code over the next tax year instead of in one payment. That spreads it across your payslips, but your take-home pay drops by the same amount, so it's worth keeping the money aside anyway.
Open the calculator with a salary to see your own figures: what payroll takes, what's left for Self Assessment and the whole year together.
Scotland, and other things that change the answer
In Scotland, income tax on profit runs from 19% to 48% across six bands, and the 21% intermediate rate starts at £27,492 of income in 2025/26 (£29,527 in 2026/27), so the share is a little higher from the middle of the basic band upwards. National Insurance is the same across the UK. Choose Scotland in the calculator for the right rates.
Other things that move the figure: a student loan (9% of income over the threshold, collected with your bill but not part of payments on account), Child Benefit if your income is over £60,000, rental profit, and pension contributions, which lower the bill if you're a higher-rate taxpayer.
A habit that works
Open a separate savings account and move the percentage across every time a customer pays you, not at the end of the month. Use the share for your expected profit, and add half again in the year payments on account start. Check it each quarter against your real figures. If your turnover was over £50,000 in 2024/25 you're already sending quarterly updates under Making Tax Digital, which makes that check easy.
This is a planning estimate, not tax advice: check your own position on GOV.UK or with an accountant. Rates from GOV.UK, checked on 19 October 2026.
Keeping the year's numbers is half the job. The SortedDesk Self Assessment Spreadsheet is a one-off £4.99: income and expenses sorted by the SA103 boxes, with a mileage log built in. If you also invoice clients, the UK Self-Employed Bundle is also £4.99 and adds a separate mileage log, an invoice tracker and a fee and profit calculator, with a two-page guide.