If you are a registered self-employed artist or artworker in the UK, you’ll need to submit a tax return to HMRC before 31st Jan each year (online). If you haven’t saved enough during the year to pay your tax bill, it can be super stressful, but with a little forward planning you can get used to saving-as-you-go to make this process easier.
As part of the Being Really Good At Being Self Employed series, here’s a tried and tested method I use for saving for my Self Employed tax bill for HMRC.
How much tax do I have to pay if I’m Self Employed in the UK?
There are a three different tax streams you’ll need to consider when saving to pay for your self-employed tax bill. These are:
- Income Tax
- National Insurance (Class 2 & Class 4)
- Student Loan Repayments (government loans via The Student Loan Company)
Important note: I am basing the all of the following workings on Self-Employed profits (income after Allowable Expenses) of UNDER £50,270. If you are earning more that that, you’ll also have to pay Higher Rate Income Tax (on profits from £50,271 to £125,140) and/or Additional Rate Income Tax (on profits over £125,140).
Income Tax
For all income (PAYE income + self-employed profits) you receive above your tax-free Personal Allowance, you’ll be liable to pay Income Tax.
EXAMPLE: In 2024, that’s 20% on everything you earn from £12,570 – £50,270
National Insurance (Class 2 & Class 4)
For all self-employed profits of £12,570 or more a year, you will also have to pay Class 2 National Insurance (in 2024, that’s a flat-rate of £179.40 per year), and Class 4 National Insurance contributions (unless you have already reached State Pension age before the start of the tax year in question)
EXAMPLE: In 2024, that’s £179.40, plus 6% on everything you earn from £12,570 – £50,270
Important note: If you have self-employed profits of less than £6,725 a year, you may choose to pay voluntary Class 2 National Insurance contributions (which you may want to do to retain access to certain benefits & State Pension qualifying years).
If you have self-employed profits of between £6,725 – £12,570 a year, you will not need to pay Class 2 NICs. Your contributions are treated as having been ‘paid’ to protect your entitlement to State Pension and certain benefits.
Hang on… is a Student Loan a tax?
If you have a UK government Student Loan, there are a range of annual income thresholds (depending on when the loan was issued / which “Plan” you are on) between £21,000 – £31,395.
If you earn over these amounts, you will need to make student loan repayments on that income at the current rate via HMRC, either on your PAYE monthly pay slip, or via Self Assessment if you are Self-Employed.
EXAMPLE: In 2024, if you have a Plan 1 Loan, that’s 9% on everything you earn above £24,990
OK – How much do I need to save to pay all this tax?
How much you’ll need to save to cover your self-employed tax bill will also depend on how much you earn from different sources of income / jobs.
The very easiest way to estimate this is to save back ~25% of your income each time you get paid for a self-employed gig. Put this money in a high-interest saving account and leave it there until your tax bill is due.
However, the exact amounts of Income Tax and National Insurance you’ll need to pay are based on how much you earn (above the current tax free Personal Allowance), the mix of income you have from PAYE (employed work) and Self-Employed work, and the amount of Allowable Expenses you have each year.
If you do some employed work (with monthly pay slips) alongside Self-Employment, this is considered PAYE (Pay As You Earn) for tax purposes.
PAYE income is usually taxed at source (eg in employed work, your tax is usually paid before you get any money in your bank account), and if you have a long-term job with one or more employers they will be attributing all (or part) of your tax-free Personal Allowance to those wages.
If 100% of your income comes from Self-Employment
| Total PAYE / Employed Income | Self Employed Income (after Expenses) | What should I save? |
| None | Less than £6,725 (or the current Class 2 National Insurance threshold) | You don’t need to save your Self Employed profits to pay Income Tax or Class 4 National Insurance, but you might consider saving £179.40 to pay Voluntary Class 2 National Insurance. |
| None | Between £6,725 – £12,570 (or the current Class 4 National Insurance threshold) | You don’t need to save your Self Employed profits to pay Income Tax or Class 4 National Insurance or Class 2 National Insurance. |
| None | Over £12,570 (or the current Class 4 National Insurance threshold) | Save 26% of all Self Employed profits over £12,570 to pay Income Tax + Class 4 National Insurance. Save an additional £179.40 for Class 2 National Insurance. |
| None | Over £21,000 (or the current Student Loan threshold for the Plan you are on) | Save 26% of all Self Employed profits over £12,570 to pay Income Tax + Class 4 National Insurance. Save an additional £179.40 for Class 2 National Insurance. Depending on the type of Student Loan plan you are on, you’ll need to save an additional 6% – 9% of all Self Employed profits your over the threshold that applies to your plan. |
If you have a mix of Self-Employed & PAYE income
| Total PAYE / Employed Income | + | Self Employed Income (after Expenses) | What should I save? |
| Less than £12,570 (or the current Personal Allowance) | + | Less than £6,725 (or the current Class 2 National Insurance threshold) | You don’t need to save your Self Employed profits to pay Income Tax or Class 4 National Insurance, but you might consider saving £179.40 to pay Voluntary Class 2 National Insurance. |
| Less than £12,570 (or the current Personal Allowance) | + | Between £6,725 – £12,570 (or the current Class 4 National Insurance threshold) | You need to save 20% your Self Employed profits to pay Income Tax on any amounts that put your combined PAYE + Self-Employed income over £12,570 |
| Less than £12,570 (or the current Personal Allowance) | + | Over £12,570 (or the current Class 4 National Insurance threshold) | Save 26% of all Self Employed profits over £12,570 to pay Income Tax + Class 4 National Insurance. Save an additional £179.40 for Class 2 National Insurance. |
| Less than £12,570 (or the current Personal Allowance) | + | Over £21,000 (or the current Student Loan threshold for the Plan you are on) | Save 26% of all Self Employed profits to pay Income Tax + Class 4 National Insurance. Save an additional £179.40 for Class 2 National Insurance. Depending on the type of Student Loan plan you are on, you’ll need to save an additional 6% – 9% of all Self Employed profits over the threshold that applies to your plan. |
| Over £12,570 (or the current Personal Allowance) | + | Less than £12,570 (or the current Class 4 National Insurance threshold) | Save 20% of all Self Employed profits to pay Income Tax |
| Over £12,570 (or the current Personal Allowance) | + | Over £12,570 (or the current Class 4 National Insurance threshold) | Save 26% of all Self Employed profits to pay Income Tax + Class 4 National Insurance. Save an additional £179.40 for Class 2 National Insurance. |
| Over £12,570 (or the current Personal Allowance) | + | Over £21,000 (or the current Student Loan threshold for the Plan you are on) | Save 26% of all Self Employed profits to pay Income Tax + Class 4 National Insurance. Save an additional £179.40 for Class 2 National Insurance. Depending on the type of Student Loan plan you are on, you’ll need to save an additional 6% – 9% of all Self Employed profits over the threshold that applies to your plan. If you’ve already made repayments from a PAYE salary, HMRC will deduct them from the total amount you have to repay. |
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