How Much Tax Will I Pay on My Self Assessment? Here’s a Simple Guide

How Much Tax Will I Pay on My Self-Assessment? A Simple Guide

If you’re self employed or earning income outside of employment, you’ll likely need to submit a Self Assessment Tax Return to HMRC. But how much tax will you actually have to pay?

This guide will break down everything you need to know, from tax thresholds and deductions to how to estimate your tax bill, so you can plan ahead and avoid any nasty surprises.

You can also use HMRCs handy calculator. Here’s the link.

What Is a Self-Assessment Tax Return?

A Self Assessment Tax Return is how you report your income and pay tax to HMRC if it’s not automatically deducted through PAYE (Pay As You Earn). You’ll need to submit one if you’re:

• Self-employed or a sole trader earning over £1,000 per year.
• A partner in a business partnership.
• Earning additional income (e.g., rental income, dividends, foreign income, or investments).
• Earning over £100,000 from employment or self-employment.

The deadline for submitting your online Self-Assessment for the 2024/25 tax year is 31st January 2026.

How Much Income Tax Will I Pay?

The amount of tax you’ll pay depends on your total taxable income after allowances and deductions. Here are the current UK tax bands for the 2024/25 tax year:

Example Calculation:
Let’s say your total taxable income for the year is £40,000. Here’s how much income tax you’d pay:

• The first £12,570 is tax-free (£0 tax).
• The next £27,430 (£40,000 – £12,570) is taxed at 20% = £5,486.
• Total income tax payable: £5,486.

How Much National Insurance Will I Pay?

Self employed individuals pay National Insurance Contributions (NICs) in addition to Income Tax.

Class 2 NICs (Flat Rate)

• If your profits are above £12,570, you pay £3.45 per week (£179.40 per year).
• If your profits are below £12,570, you don’t have to pay, but can opt to voluntarily contribute to protect your State Pension.

Class 4 NICs (Profit-Based)

Example Calculation:
If your profit is £40,000, you’ll pay:

• £3.45 per week for Class 2 NICs = £179.40 per year.
• Class 4 NICs:
  • First £12,570 = £0.
  • Next £27,430 (£40,000 – £12,570) at 6% = £1,645.80.
• Total NICs payable: £1,825.20.

How to Reduce Your Tax Bill

You don’t have to pay tax on all your income – there are ways to reduce your bill through deductions and allowances.

1. Claim Allowable Business Expenses

If you’re self-employed, you can deduct business-related expenses before calculating your taxable income. Common expenses include:

• Home office costs (if you work from home).
• Travel expenses (fuel, public transport, mileage).
• Marketing, website, and advertising costs.
• Equipment and software (laptops, accounting software, etc.).
• Professional fees (accountants, subscriptions).

💡 Example:
If your total income is £40,000 and your business expenses are £5,000, you’ll only pay tax on £35,000.

2. Use the Trading Allowance (£1,000)

If you earn under £1,000 from self-employment or a side business, you don’t need to register for Self Assessment.

3. Pay Into a Pension

Contributions to a private pension scheme qualify for tax relief, reducing your taxable income.

4. Use the Marriage Allowance

If your partner earns less than £12,570, they can transfer up to £1,260 of their Personal Allowance to you, saving up to £252 per year in tax.

5. Consider VAT Registration

If your turnover is above £90,000, you must register for VAT. However, voluntary registration can also allow you to reclaim VAT on business expenses.

How to Calculate Your Self Assessment Tax Bill

To estimate your tax liability:

1. Add up your total income (from self-employment, rental income, dividends, etc.).
2. Subtract allowable expenses to find your taxable profit.
3. Apply the income tax rates to calculate tax owed.
4. Add National Insurance contributions.
5. Subtract any tax reliefs or allowances to get your final bill.

Example: Self-Assessment Tax Calculation

When and How to Pay Your Tax

Key Deadlines

• 31st January 2026 – Deadline for filing your 2024/25 Self-Assessment and paying tax due.
• 31st July 2026 – Second Payment on Account if applicable.

Payment Methods

• Bank Transfer (Faster Payments, CHAPS, Bacs).
• Debit Card or Corporate Credit Card.
• Direct Debit or Budget Payment Plan (spread the cost).
• Paying via PAYE Tax Code (if employed).

Avoiding Penalties for Late Submission

Missing the deadline can be costly! 

• 1 day late = £100 fine.
• Up to 3 months late = £10 per day (max £900).
• 6 months late = Extra £300 or 5% of unpaid tax.
• 12 months late = Another £300 or 5% of unpaid tax.

🔹 Pro tip: File early to avoid last-minute stress and penalties.

Need Help with Your Self-Assessment?

Filing a tax return can be time-consuming and stressful. If you want to ensure accuracy and avoid overpaying tax, we can help!

You can contact us easily…

📞 Book a zoom call here.

📞Call our office: – 01172901204

Here’s to a stress-free tax season