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Just joined the self-employed club? Then you’re probably wondering ‘how much tax do self-employed pay?’ Let us help you with that!
Before diving straight into how much the self-employed pay in taxes, it’ll help to understand what type of taxes the self-employed have to pay. So here we are:
The self-employed pay their taxes through a Self Assessment tax return. This is an online or paper form that lets HMRC know how much income and profit you’ve earned throughout the year.
A tax return has to be filed annually unless you unregister for self-employment.
If you are newly self-employed, you have to fill in your Self Assessment tax return and pay tax by 31st January following the year that you started running your business. So, if you begin trading in May 2023, you have to submit a Self Assessment in January 2025. This is because May 2023 falls under the 2023/24 tax year.
If you’re filing your first self-employment tax return (hooray!), you’ll want to make note of these important dates:
And now. The moment we’ve all been waiting for! How much tax do the self-employed pay? 🥁
Well, sorry to disappoint, but there’s no set figure that all self-employed people pay. Surely that would be *extremely* unjust since someone earning £200,000 would pay the same tax as someone who earns £20,000. 😅
However, here are some self-employed tax facts that you may want to know if you’re joining the self-employed club. 👇
The income tax rates for the self-employed are exactly the same as the rates for employed people. But there is still a difference. Self-employed people only pay income tax on their profit, not their total earnings like employed people.
Julietté is a self-employed (highly successful) pastry chef. 🧑🍳
She made a total of £150,000 for the year, but £12,000 of this was spent on bags of flour, so her profit is £138,000. She’ll be taxed on the £138,000, not the entire £150,000.
As Juliette’s income has gone over £125,000, she’s lost all of her personal allowance. Usually, everyone’s entitled to a £12,570 personal allowance, however, this is reduced by £1 for every £2 over £100,000.
Get an estimate of your taxable income with our income tax calculator below:
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
Self-employed people can deduct what is called ‘allowable expenses’ from their taxable profit to reduce their tax bill. These are essential costs to run your business i.e, office equipment such as stationery and desks (in Juliette’s case, bags of flour).
Want to know what you can claim as a business expense? Find out here!
Both employed and self-employed people pay national insurance. But there are some differences.
How much national insurance you pay depends on your employment status (and how much you earn).
We know we said the self-employed file their taxes via paper or online, and it is true. But this is changing.
Soon(ish), you’ll no longer be able to use HMRC’s website to file your tax returns. Instead, you’ll have to keep and submit digital records of your earnings and expenses using MTD-compatible software. This will come into effect in 2026.
Want to know more about making tax digital? Read all about it here.
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