How much tax should I put aside when I'm self-employed?

Updated 7 October 2026 · 2026/27 tax year

When you're self-employed nobody takes tax off for you, so the bill arrives in one go each January. The trick is to put a little aside from every payment. Here's how much.

The rule of thumb

For most tradespeople, putting aside 20% to 25% of your profit (what's left after costs and mileage) covers Income Tax and Class 4 National Insurance, with some to spare for payments on account. If you earn over about £50,000 profit, put aside more, around 30% or more of the extra.

How it's worked out (2026/27)

The first £12,570 of profit is tax free
Income Tax: 20% on profit from £12,571 to £50,270, then 40%
Class 4 National Insurance: 6% on profit from £12,571 to £50,270, then 2%

Worked examples

£20,000 profit: about £1,932 (10% of profit)
£30,000 profit: about £4,532 (15% of profit)
£45,000 profit: about £8,432 (19% of profit)

Don't forget payments on account

If your bill is over £1,000, HMRC also asks for advance payments towards next year: half your bill again, split between January and July. In your first year this can nearly double what's due in January, so put a bit extra aside.

What changes the figure

CIS already taken off by contractors comes off your bill
A job or pension alongside your business can push profit into the 40% band
Pension contributions and allowable costs bring it down
Living in Scotland: the Income Tax bands are different
Student loan repayments are collected on top

Let VanBooks do it for you. VanBooks tells you how much to put aside after every payment, counting CIS, a job or pension, Scotland and student loans, and shows when each payment to HMRC is due. Try it free for a month

This guide is general information, not tax advice. Check HMRC's guidance or ask an accountant about your own situation.