UK Income Tax Brackets for Self-Employed 2025/26
| Tax Band | Profit Range | Tax Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic Rate | £12,571 – £50,270 | 20% |
| Higher Rate | £50,271 – £125,140 | 40% |
| Additional Rate | Over £125,140 | 45% |
Source: HMRC / gov.uk · Rates correct for 2025/26 tax year.
These brackets apply to profit — revenue minus allowable business expenses. Reducing expenses increases deductible costs and can move income down into a lower bracket, though the priority should be claiming all legitimate expenses rather than artificially inflating them.
How Tax Brackets Stack With National Insurance
Self-employed people pay both income tax and Class 4 NI on the same profit. Between £12,570 and £50,270, you owe 20% income tax plus 9% Class 4 NI — a combined marginal rate of 29%. Above £50,270, it is 40% income tax plus 2% NI — a combined rate of 42%. Above £125,140 it is 45% plus 2% = 47%.
This makes the effective combined rate meaningfully higher than income tax alone, which is why take-home pay for higher-earning freelancers can feel lower than the headline tax brackets suggest.
Worked Example: £45,000 Profit
At £45,000 self-employment profit: Personal allowance: £12,570 (0%). Basic rate: (£45,000 − £12,570) × 20% = £6,486. Class 4 NI: (£45,000 − £12,570) × 9% = £2,918.70. Class 2 NI: £179.40. Total tax + NI: £9,584.10. Take-home: £35,415.90 (79% of profit). Use the tax calculator to run your own numbers instantly.