What taxes do self employed have to pay?

Self-employed have to pay the same taxes as regular employees: income tax and National Insurance contributions.

However, the way you pay is different.

The tax free allowance for self-employed

Is the same as for regular employees: £11,850 in the 2018/19 tax year.

If you have two jobs and one is self-employed, make sure that your personal allowance is applied to the one where you make the most money.

Just look at the tax code:

  • Your main employment has the tax code ending in L.
  • Your secondary job will then have the tax code D0, D1, or BR.

Tax rates for self-employed

Unlike for employees, when you’re self-employed you pay income tax on your profits only, not your total income.

To calculate your profits deduct your claimable expenses from your self-employed income.

Then simply multiply by the tax rate:

Income Tax rate
between £0 and £11,850 0%
between £11,851 and £46,350 20%
between £46,351 to £150,000 40%
above £150,001 45%

Here is a self-employed income tax calculator if you want to know how much you have to pay.

National Insurance Contributions (NIC) for self-employed

As a self-employed, you need to pay:

  • Class 2 NIC
  • and maybe Class 4 NIC: depending on your profit.

Check out our article about the NIC that sole traders have to pay.

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