When you’re self-employed, you have to pay your income tax and national insurance contributions yourself in your annual Self Assessment. Our calculator helps you quickly assess how much you owe.
However you may be eligible for a tax refund when:
In your case when you earn £50,000:
You pay no income tax on first £12,570 that you make
You pay £7,286 at basic income tax rate (20%) on the next £36,430
No contributions on the first £9,568 that you make
You pay £3,549 in contributions (at 9%) on the next £39,432 that you make
You pay £159 in NI Class 2 contributions
Before using our UK Income Tax calculator, it would probably help to know what the heck Income Tax is. Income Tax is basically a charge that we all pay on our earnings in the UK. You have to pay it when you earn more than £12,570 in the 2023/24 tax year. This earnings threshold is known as the Personal Allowance. It’s a tax-free allowance that we’re all entitled to unless you earn more than £100,000. If you earn more than this, HMRC class you as a high earner and you lose your entitlement to the allowance for each £1 you earn over £100,000.
What you owe in Income Tax is calculated based on how much you earn. The Income Tax rates are set by the government. If they change, this usually happens in the Spring or Autumn Budget. In the current 2022/23 tax year, the rates are in the table below:
|Up to £12,570||0%||Personal allowance|
|£12,571 to £50,270||20%||Basic rate|
|£50,271 to £125,140||40%||Higher rate|
|over £125,141||45%||Additional rate|
The income thresholds were recently changed by the government, but the tax rates remain the same. It’s important to remember when calculating your taxes that the rates only apply to a portion of your income and not the whole amount. For example, if you earn £60,00 a year, you’re not taxed 40% of this full amount. It breaks down like this:
You can see the exact breakdown above when you use the calculator.
When you’re self-employed, you can deduct your business spending from your overall yearly earnings so that you’re only paying tax on your profits. This business spending is known as your expenses.
In order to deduct expenses, it’s important to keep a record of what you spend, on what, and when. Take a look at our guide on why it’s important to keep receipts below if you want to read more. To use the TaxScouts service, we don’t need to see your receipts but we will need to see your records (whether in a spreadsheet or downloaded from accounting software you use).
If you’re calculating your Self Assessment tax bill, just switch to the self-employed button in the Your Situation section. Based on the amounts of income you’re earning, we’ll work out the Income Tax you and National Insurance (NI) contributions you owe on your self-employed profits.
If you’re both employed and self-employed, or you’re employed with another side hustle – like investing, an Airbnb business etc. – and you want to work out what tax you owe based on your total income, check out our other tax calculators.
Unlike employment income where your tax is deducted automatically, leaving you with your tax home pay as your salary, your Self Assessment tax bill has to be paid manually by you. You’ll pay National Insurance and Income Tax in a lump sum – and this needs to be done by 31st January following the tax year ending.
Filing with TaxScouts is just easier. Not only that, but we’re friendlier, jargon-free and have expert accountants on our side.