Self employment - full list of taxes

What is the tax free allowance for self-employed?

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

However, if you earn over £100,000, this allowance is reduced by £1 for every £2 of income over £100,000.

Things get more complicated if you have two jobs and one is self-employed.

You only get one personal allowance, which is applied to what HMRC see as your main employment.

It is very important you make sure that your personal allowance is applied to the job where you make the most money. Just look at the tax code:

  • Your main job has the tax code 1185L (or 1150L for the tax year 2017/18).
  • Your secondary job will then have the tax code D0, D1, or BR.

What are the tax rates for the self-employed?

When you’re self-employed, you pay income tax on your profits, not your total income. To calculate your profits just deduct your business expenses from your total income.

The amount of income tax you pay is the same as if you were employed.

  • For income between £0 and £11,850, the rate is 0% (the "personal allowance");
  • For the income between £11,851 and £46,350, the tax rate is 20% (the basic rate);
  • For the income between £46,351 to £150,000, the tax rate increases to 40% (the high rate);
  • For anything above £150,001, the tax rate is 45% - the top rate.

Here is a self-employed income tax calculator that we built for you.

What are the National Insurance Contributions for self-employed?

As a self-employed, you need to pay Class 2 and Class 4 NIC, depending on your profit.

For more information, check out our article about the National Insurance contributions that sole traders have to pay.

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