Self employed income tax calculator 2020/2021 - UK

Figuring out your taxes as a freelancer or self employed worker in the UK can be a hassle. Make it easier to see the tax you owe – and your take home pay – using our free self employed tax calculator.

You can also cut costs and keep more for yourself when invoicing international clients, with a Wise business account.

What is the self-employment tax?

Self employed and freelance workers file and pay UK taxes using a self assessment tax return. The main taxes to know about are income tax and National Insurance. However, other forms of tax may also apply if you’re a business owner, including VAT, dividend tax and corporation tax.

It’s worth noting that the tax regimes can vary between England and Northern Ireland, Wales, and Scotland. The tax brackets are also reviewed and may change annually – take professional advice if you’re unsure of your obligations.

Calculate your UK income tax and National Insurance with our self employed tax calculator. Or get an idea of your tax liabilities yourself using the following steps:

  • Calculate your annual income
  • Deduct your tax free allowance and any allowable business expenses to get your taxable income
  • Estimate your tax, based on annual taxable income, and the tax brackets applied in the region of the UK you live in.

What are estimated pay taxes?

What are estimated pay taxes and how to calculate them?

The way tax works can vary depending on employment status and where in the world you are.

If you’re a freelancer or self employed worker in the UK, you may pay your taxes in arrears, once you’ve submitted your tax filing for the year with HMRC. Or, depending on the amount you earn, you may need to make a Payment on Account. This is a partial payment installment, based on the tax you paid in the prior year. In some circumstances you can also set up an advance payment system directly with HMRC.

Of course, even if you pay in arrears you might choose to estimate your annual tax bill in advance, and save your tax separate from your day to day finances, to be sure you’ve got the money you need to pay later. You can use our income tax calculator to figure out how much you’ll need.

In the US, you may pay estimated taxes – especially if you’re a sole proprietor or a company owner. In this case, you’ll need to calculate your likely tax, and submit a regular payment, with an annual process to balance the books and refund any extra paid.

Self employed income tax calculator

How to use the self employed income tax calculator

Here’s how to use the self employed income tax calculator:

  • Gather all your financial information in advance to make it easier to find the detail you need
  • Enter your annual gross income into the calculator
  • Calculate your allowable business expenses, and add this to the calculator
  • You’ll then be able to see your annual profit, as well as you estimated tax liability, and your monthly take home pay

Other expenses when self-employed

Under HMRC rules, there are some allowable business expenses you can deduct from your income to reduce your tax bill. These include office supplies, office rent, business travel costs, and so on. If you work from home, or have assets – like a vehicle – you use for both personal and business purposes, you may be able to deduct a portion of this cost, too. However, strict rules apply, so reading up on what is and is not allowed is essential.

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Self employed income tax FAQ

Are there any penalties for not paying self employed taxes in time?

If you don’t pay your UK taxes on time, you may be subject to legal action including penalty fees. Check out the tax filing and payment dates, which can vary according to how you submit your self assessment form, to make sure you’re on time.

When do I need to submit my estimated tax as self employed?

If you’re self employed in the UK you’ll need to register for tax self assessment with HMRC. You’ll be able to check whether you have to make a Payment on Account – a partial tax payment installment during the tax year – or pay in arrears according to your income level. Deadlines can change over time. For the 2019/20 tax year, you’d need to register for self assessment by 5 October 2020, and pay your taxes in full by 31 January 2021.

How to calculate self-employment tax?

The easiest way to calculate your self employment taxes is to use our handy calculator. You’ll be able to enter your gross income and business expenses to get your estimated tax and National Insurance payments, as well as see your remaining monthly take home pay after tax.

Where do I pay my self employment taxes?

Self employment taxes are paid to HMRC. The easiest way to do this is through a bank transfer, although you can also set up a direct debit or make a payment in a branch of a major bank. Check the UK government website for full details and options which may suit you.

Do self employed people get a tax refund?

To check if you’ve paid the correct amount of tax, you’ll need to contact HMRC directly. You can call, write, email or even use social media to get general support and help.