Methodology

Tax year and region

The calculator supports tax years 2025/26 and 2026/27, defaulting to the current active tax year. England, Wales and Northern Ireland share the same income tax bands and are treated identically. Scotland has separate income tax bands set by the Scottish Parliament, applied when Scotland is selected as the region.

The tax year runs from 6 April to 5 April the following year. Thresholds, allowances and rates are those published by HMRC for the selected year and are reviewed at each Budget. Source links to GOV.UK are provided for key rate sets.

Personal Allowance and income tax bands (England, Wales and Northern Ireland)

For 2026/27: Personal Allowance £12,570. Basic rate 20% on taxable income from £12,571 to £50,270. Higher rate 40% on taxable income from £50,271 to £125,140. Additional rate 45% on taxable income above £125,140.

The Personal Allowance is reduced by £1 for every £2 of income above £100,000, reaching zero at £125,140. In the taper range, the effective marginal rate of income tax alone is 60%. The calculator reflects this taper where applicable.

Taxable income for these purposes is the sum of sole trader profit plus any other income entered. Pension contributions are not deducted (see below). The calculator does not apply the marriage allowance or blind person's allowance.

Scottish income tax

Scotland applies its own income tax bands above the Personal Allowance (which remains UK-wide at £12,570). For 2026/27, the Scottish structure uses a starter rate, basic rate, intermediate rate, higher rate and top rate with different thresholds to the rest of the UK.

When Scotland is selected, the calculator applies Scottish bands to sole trader profit and other income. Class 4 National Insurance is not devolved and applies at UK-wide rates regardless of region.

Class 4 National Insurance

Class 4 NI is payable by self-employed people on taxable profit between the lower and upper profits limits. For 2026/27: 6% on profits from £12,570 to £50,270, and 2% on profits above £50,270.

Compulsory Class 2 National Insurance ended from 6 April 2024, so it is not included in any calculation on this site (voluntary Class 2, £3.65 a week in 2026/27, is still available if profits are under £7,105).

Class 4 NI is paid via Self Assessment alongside income tax. It does not build entitlement to the State Pension in the same way as employed contributions — state pension entitlement for self-employed people depends on national insurance credit rules that are separate from the Class 4 calculation.

Student loan repayments

Self-employed student loan repayments are collected through Self Assessment on the taxable profit figure. The repayment threshold and rate vary by plan: Plan 1 — 9% on income above £26,900; Plan 2 — 9% on income above £29,385; Plan 4 (Scotland) — 9% on income above £33,795; Plan 5 — 9% on income above £25,000; Postgraduate — 6% on income above £21,000.

Thresholds are reviewed annually. The calculator uses published thresholds for the selected tax year. It takes one plan at a time: if you have an undergraduate loan and a postgraduate loan, both are repaid, so work out each plan and add the two repayments together.

Pension contributions

The pension input is treated as a personal pension contribution made in the tax year. It is taken off your take-home pay as money you pay out. The calculator does not add the Income Tax relief on it, and it does not reduce the profit figure used to calculate Class 4 NI.

This reflects the real treatment: personal pension contributions attract basic-rate tax relief at source and may reduce higher-rate income tax liability through Self Assessment, but they do not reduce National Insurance in the way that salary sacrifice does for employees.

The calculator does not model annual allowance limits. Contributions above the £60,000 annual allowance may be subject to a tax charge not reflected in the estimate. Consult an adviser if contributions are at or near the allowance.

Monthly set-aside and quarterly reserve

The monthly tax set-aside is calculated as (income tax + Class 4 NI + student loan repayment) divided by 12. Pension contributions are excluded from the set-aside because they are modelled as a direct cash outflow from profit rather than a tax cost to ring-fence.

The quarterly reserve is the monthly set-aside multiplied by three. It is shown as a reference figure for sole traders who prefer to manage their tax reserve in quarterly chunks.

These figures are planning estimates. They do not automatically account for payments on account, seasonal income variation or other Self Assessment-specific adjustments. Use them as cashflow discipline, not as precise filing calculations.

What this calculator does not include

Capital gains tax. VAT. The tax on other income such as PAYE wages: other income is used to work out which bands your profit falls in, and the tax on it is treated as already collected at source, so it is not part of the bill shown. Employment Allowance. The NI interaction where employment and self-employment NI overlap at the annual maximum. Capital allowances on equipment. Repayments on more than one student loan plan at once.

Results should not be used as the basis for a formal tax return, compliance decision or professional advice. For filing, use HMRC's Self Assessment service or consult a qualified accountant.