Self Assessment Tax Return

How do I know how much tax to put aside?

Self-employed individuals in the UK should typically set aside 20-30% of their income for taxes, depending on their profit levels and National Insurance obligations. When determining self-employed how much to set aside for taxes UK, consider Income Tax rates of 20% (basic) or 40% (higher), plus Class 2 and Class 4 National Insurance contributions. Calculate based on your expected annual profit after allowable expenses, and consider making payments on account to HMRC.

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How do I know how much tax to put aside? - GoForma Tax Guides | UK Accountants & Tax Advisors
This article is part of our Self Assessment Tax Return guide — your essential resource for filing your Self Assessment tax return.

When it comes to setting aside money to pay your tax bill, the general rule of thumb percentage for self-employed individuals is 25% - 30%.

This figure will vary depending on the amount of profit you report. If your profit falls between £50,000 - £100,000, it is recommended that you set aside 40% for tax. And if your profit exceed £100,000, you should be setting aside 45% for tax.

Bear in mind that these are general recommendations, and may not be an accurate estimation depending on your circumstances. HMRC's ready reckoner tool can help you work out an approximate figure you need to set away each month. We recommend consulting our Forma accountants if you need further tax advice.

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