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How much tax will I pay being self-employed?

Unlike permanent employment, being self employed means you will be paid the whole invoice amount without any tax removed, so don’t be tempted to take all the money out and spend it, you’ll need to put some aside to cover your taxes. As a general rule, we recommend you put 30% of everything you earn to one side, and this should cover your tax and National Insurance, but you will be able to adjust this over time as you get a better feel for your tax liabilities. Your take home pay is your profit – i.e. income less expenses, tax and National Insurance. See below for a rough illustration, these figures are based on estimated expenses of 10% of your turnover.

Annual incomeAnnual take home pay Monthly take home pay
£20,000£15,666£1,280
£40,000£28,146£2,345
£60,000£39,295£3,275
£80,000£49,735£4,145

As your tax is based on your profit after allowable expenses, you need to be sure that you are claiming everything you are entitled to and ensure that your tax bill isn’t larger than it needs to be – your accountant can advise you on this. However, as a rough guide, anything which is a business cost is tax deductible.