# What will I actually owe?

Canonical: https://taxmo.co.uk/tax-calculator-self-employed
Last updated: 2026-04-25

The question every sole trader asks, and the one that is hard to answer from a bank balance, because turnover is not profit and profit is not what you keep.

## Turnover, profit, then tax

Tax is charged on profit: income less allowable expenses and capital allowances. Two businesses with identical turnover can owe very different amounts, which is why a percentage-of-turnover rule of thumb is worse than useless.

## Income tax and Class 4 together

Self-employed profit attracts both income tax and Class 4 National Insurance, on overlapping but not identical bands. Looking only at the income tax rate understates what you owe, which is the usual reason a January bill surprises someone who thought they had budgeted.

## Set aside as you go

The useful output is not the annual figure, it is the amount to reserve per thousand pounds received. Taxmo shows a running effective rate against your actual recorded profit and a suggested reserve, so the money is there when the return is due.

## Common questions

### How much should I set aside for tax?

It depends on your profit level, because the rates are banded and the Personal Allowance covers the first slice. A running estimate from your own figures is far more reliable than a flat percentage. Remember payments on account, which can add half of next year's bill to the January payment.

### Does the estimate include everything?

It covers income tax and Class 4 National Insurance on your recorded self-employed profit. It cannot know about other income, other reliefs or your full circumstances, so treat it as a planning figure and settle the real position through Self Assessment.

### Are the rates different in Scotland?

Scotland sets its own income tax bands and rates on non-savings, non-dividend income, determined by where you are resident rather than where the work is done. National Insurance is unaffected.

## Related pages

- [Self Assessment without the January reconstruction](https://taxmo.co.uk/self-assessment-software)
- [Accounting software for UK sole traders](https://taxmo.co.uk/accounting-software-sole-traders)
- [Track expenses without the shoebox](https://taxmo.co.uk/expenses-tracker-uk)

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This page explains how UK rules work rather than quoting thresholds, rates or allowances, which are indexed or reset at fiscal events. Check current amounts on GOV.UK.