How much to save for tax when self-employed

The short answer

For a sole trader in England, Wales or Northern Ireland with no other income, income tax plus Class 4 National Insurance for 2026/27 comes to:

"Profit" here means your income minus allowable expenses. "Per month" is the yearly figure divided by 12. These figures assume the standard £12,570 Personal Allowance, no student loan and no other income such as a job or dividends.

The percentage climbs with profit because the first £12,570 is tax-free and the rates step up as you go. That is why a flat "save 30%" rule is too much for most people on lower profits, and not enough once you are well into the higher rate band.

How each figure is worked out

The 2026/27 rates: income tax at 20% on income from £12,571 to £50,270 and 40% from £50,271 to £125,140. Class 4 at 6% on profits from £12,570 to £50,270 and 2% above that. The basic rate band is £37,700 wide (£50,270 − £12,570).

For 2025/26 the numbers are the same, because the rates for England, Wales and Northern Ireland did not change.

A simpler rule for each pound

If you prefer to save as you go, think about each extra pound of profit:

• below £12,570: nothing to save
• £12,570 to £50,270: 26p in every pound (20% tax + 6% Class 4)
• £50,270 to £100,000: 42p in every pound (40% + 2%)

Above £100,000 the Personal Allowance starts to shrink and the rate on each pound jumps to 62%. The rates guide explains why.

If you live in Scotland

Scottish income tax uses different bands. For 2026/27, Class 4 is the same as the rest of the UK.

At £45,000 the Scottish total is £8,827.85 (19.62%), because the top £1,338 falls in the 42% higher band. In Scotland, profit between £43,663 and £50,270 costs 48p in every pound.

Student loans add to the bill

If you repay a student loan through self assessment, add 9% of income over your threshold (6% for postgraduate loans). On a Plan 2 loan with £40,000 profit in 2026/27:

The first-year trap

Saving the yearly figure is not enough in your first year. When the bill is £1,000 or more, HMRC also asks for the first payment on account towards next year, on the same 31 January. On £30,000 profit that means:

Then £2,265.90 more by 31 July. After the first year, January and July settle into roughly half of a year's tax each, as long as your profit stays similar.

Practical tips

• Use a separate savings account. Move the set-aside amount every time you are paid, not at the end of the month.
• Round up. If your profit is £30,000, saving 16% or 17% instead of 15.11% gives you a buffer for a better-than-expected year.
• Re-check every quarter. If profit is running ahead of last year, your balancing payment and your next payments on account will both go up.
• Claim every allowable expense. Expenses reduce profit, and every £1 of expense in the basic rate band saves 26p. See simplified expenses.

What these figures leave out

They do not include dividends, savings interest over your allowance, property income, capital gains, pension tax relief or the High Income Child Benefit Charge. If you also have a job, your PAYE tax uses part of your allowance and bands, so the share on your self-employed profit will be higher. Sole Sums does not cover those cases either. It is an estimate, not tax advice.