Freelance Tax Calculator

Freelance tax in the UK is calculated on your net taxable profit: total business income minus allowable expenses. Allowable expenses include materials, software, professional subscriptions, travel, insurance, a proportion of home office costs, phone, and accountancy fees. The resulting profit figure is then subject to Income Tax and two classes of National Insurance via the Self Assessment system, with payments due by 31 January following the tax year.

Income Tax is applied in bands after deducting the £12,570 Personal Allowance: 20% on the first £37,700 of taxable income (basic rate), 40% on income between £50,271 and £125,140 (higher rate), and 45% above £125,140 (additional rate). The Personal Allowance reduces by £1 for every £2 of income above £100,000, reaching zero at £125,140—creating an effective 60% marginal rate in that band.

Class 2 NI is a flat weekly amount of £3.45 per week (£179.40 per year) payable when profits exceed £12,570. Class 4 NI is 6% on profits between £12,570 and £50,270, then 2% on profits above £50,270. Both are collected through Self Assessment. Payments on Account (two advance payments of 50% each in January and July) apply if your tax bill exceeds £1,000 and less than 80% is collected at source.