Freelance Tax Set-Aside Calculator — United Kingdom
UK sole traders pay Income Tax through Self Assessment plus Class 4 National Insurance (6% on profits between £12,570 and £50,270, then 2%). Your first £12,570 is covered by the Personal Allowance, but it tapers away once profits pass £100,000. Payments on account — advance payments toward next year’s bill each January and July — catch many first-year freelancers off guard, so set aside more than your headline rate.
2026/27 tax year (England, Wales & NI). Data reviewed August 2026.
What’s in this estimate
- Class 2 NICs are now treated as paid for most self-employed people; Class 4 is the one that costs you.
- The Personal Allowance shrinks by £1 for every £2 of profit above £100,000 — an effective 60% band to £125,140.
- Scotland has different income tax bands — this estimate uses rUK rates.
- If your turnover exceeds £90,000 you must register for VAT.
Primary source: GOV.UK — Self Assessment tax rates. Rates and thresholds are reviewed when new tax-year figures are published; always confirm current numbers against the official source before filing.
How to use the number
The headline percentage applies to gross revenue, not profit — because invoices are what actually land in your account. When a client pays £5,000, move that percentage into a separate tax account the same day. The buffer input adds a small cushion on top of the pure calculation: prepayment systems and mid-year rate changes punish exact planning.
Frequently asked questions
How much should a UK sole trader set aside for tax?
Roughly 25–30% of profit is a safe rule for basic-rate freelancers, rising to 35–42% once you cross into higher rate. Remember payments on account: in your first year of Self Assessment you may effectively pay 150% of one year’s bill in a single January.
Sole trader or limited company — which pays less tax?
At lower profits the difference is small since dividend tax rose; many contractors find a limited company worthwhile above roughly £50,000 profit, or when clients require it or IR35 considerations apply. An accountant can model both — this calculator assumes sole trader.
When are Self Assessment deadlines?
Register by 5 October after your first tax year; file online and pay by 31 January. Payments on account fall due 31 January and 31 July. Making Tax Digital is phasing in quarterly digital reporting for sole traders above the income threshold.
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Simplified estimate for planning only — not tax advice. It assumes all profit is taxed as self-employment income for a single individual with no other income, and excludes credits, reliefs and regional variations noted above. Confirm withGOV.UK — Self Assessment tax rates or an accountant.Full disclaimer.