Employed and Self-Employed Tax Calculator

The two systems that apply to you

In the UK, income tax and National Insurance are collected differently depending on how you earn money. If you are employed, your employer deducts tax and Class 1 NI through the PAYE (Pay As You Earn) system every time you are paid. If you are self-employed, you report your profits via a Self Assessment tax return once a year and pay what you owe directly to HMRC.

When you have both types of income — say, a salaried job plus freelancing, a delivery round, or any other self-employed work — both systems apply at the same time. PAYE handles your salary automatically. Self Assessment handles your self-employed profit (and any shortfall in tax that PAYE missed).

How income tax is calculated on combined income

Income tax applies to your total income from all sources, not separately to each. HMRC adds together your employment income and self-employed profit, deducts your Personal Allowance (£12,570 in 2025/26), then applies the tax bands to the combined total.

This matters because the rate bands stack. If your employment salary alone fills up most of the basic rate band (20%), your self-employed income on top may push some of your total income into the higher rate band (40%) — even if the self-employed profit itself would be taxed at 20% if it were your only income.

The PAYE tax code problem

Your employer uses your tax code to deduct the right amount of income tax from your salary. The standard code is 1257L, which gives you the full Personal Allowance of £12,570 against your salary. The problem: your employer has no way of knowing about your self-employed income.

As a result, your employer will almost certainly under-deduct income tax. The underpayment builds up silently throughout the year and becomes payable via Self Assessment on 31 January after the tax year ends. This is not a penalty or a mistake — it is simply how the two systems interact. But it can come as a shock if you have not been setting money aside.

Once you have filed your first Self Assessment return, HMRC may update your tax code for future years to collect some of the expected liability through PAYE in advance. This reduces (but does not eliminate) the Self Assessment bill, and can mean your take-home salary reduces slightly during the year.

National Insurance: two separate charges

Unlike income tax, National Insurance is not calculated on your combined income. It is calculated separately on each income stream.

On your employment income, your employer deducts Class 1 NI through PAYE. The 2025/26 rate is 8% on earnings between £12,570 and £50,270, then 2% above. Your employer also pays employer's NI on top of your salary — but that does not come out of your pay.

On your self-employed profit, you pay Class 4 NI via Self Assessment. The 2025/26 rate was cut from 9% to 6% on profits between £12,570 and £50,270, and remains 2% above. Class 2 NI was abolished from April 2024 — most self-employed people no longer have to pay the flat weekly charge, but still receive NI credits for state pension purposes.

Registering for Self Assessment

If your self-employed profit exceeds £1,000 in a tax year, you must register for Self Assessment. The deadline to register is 5 October following the end of the tax year in which you first had self-employed income. The tax year runs from 6 April to 5 April.

Once registered, you file an online tax return by 31 January and pay any tax owed by the same date. If your SA bill exceeds £1,000, HMRC will require you to make Payments on Account — advance contributions toward the following year, split across 31 January and 31 July. This effectively means paying 150% of your first year's bill in January, which catches many people out.

How much to set aside

A sensible rule of thumb: set aside 25–30% of your self-employed incomeas you earn it. The exact percentage depends on your total income level and whether your SE profit pushes you into the higher rate band.

Use this calculator above to get a personalised estimate. Once you know your approximate SA liability, divide it by 12 and set that amount aside monthly. Some people open a dedicated savings account labelled "Tax" and transfer money in every time a client pays them.