Freedom Isn’t Free UK Personal Finance
Self-Employed
How Much Tax to Set Aside When Self-Employed (2026/27)
As a self-employed sole trader, set aside roughly 20-25% of profit if you are a basic-rate taxpayer, 35-40% if higher-rate, and more once profit passes GBP 100,000. But your first bill is around 1.5x one year of tax, because HMRC adds payments on account.
How much to set aside for tax by profit band (2026/27)
| Profit band or situation | Marginal rate (Income Tax + Class 4 NI) | Suggested set-aside |
|---|---|---|
| First GBP 12,570 of profit | 0% Income Tax, 0% Class 4 NI | Nothing on this slice |
| GBP 12,570 to GBP 50,270 | 20% + 6% = 26% on this slice | 20-25% of total profit |
| GBP 50,270 to GBP 100,000 | 40% + 2% = 42% on this slice | 30-35% of total profit |
| GBP 100,000 to GBP 125,140 | 60%+ effective (Personal Allowance taper) + 2% | 40%+ of total profit |
| Over GBP 125,140 | 45% + 2% = 47% on this slice | 40-45% of total profit |
| PAYE side-hustler over the GBP 1,000 trading allowance | Your top marginal rate from the first GBP 1 of profit | 20%, 40% or 45% of profit, matching your top band |
| First Self Assessment bill | Bill plus a 50% payment on account | Up to 1.5x one year of tax |