When you choose the United Kingdom in Nett, the app avoids the lazy “save 30%” rule. UK sole trader cash flow depends on Income Tax, Class 4 National Insurance, VAT registration, and the Self Assessment calendar.

It is still an estimate. Nett does not file your Self Assessment and it does not replace an accountant. It answers the daily question instead: after HMRC’s share, what can you spend?

What Nett uses for the UK

Area	What Nett applies
Income Tax	0%, 20%, 40% and 45% bands
Personal Allowance	£12,570, tapering after £100,000
National Insurance	Class 4: 6% then 2%
Class 2 NI	Voluntary/detected, not reserved by default
VAT	20%, 5% or 0%, only when VAT registered
VAT threshold	£90,000 rolling 12 months
Tax year	6 April to 5 April
Self Assessment	Reserve for annual bill and possible Payments on Account

Income Tax: profit, not turnover

Nett starts from profit, not invoice total. If you invoice £52,000 and have £7,000 of allowable business expenses, the tax calculation starts from £45,000 profit.

For the 2026/27 tax year, the standard UK bands used by Nett are:

Taxable profit	Rate
Up to £12,570	0%
£12,571 to £50,270	20%
£50,271 to £125,140	40%
Over £125,140	45%

The £12,570 Personal Allowance is encoded as the first 0% band. Nett also accounts for the taper: once income goes above £100,000, the allowance reduces by £1 for every £2 over that limit. That matters because a freelancer near the taper zone can face a much sharper marginal hit than a simple flat-rate estimate suggests.

Scotland has different Income Tax rates. Nett’s UK v1 model uses the standard UK structure for the main sole-trader estimate, so Scottish taxpayers should treat the reserve as a planning estimate and check the final position with their accountant.

National Insurance: Class 4 is part of the reserve

For self-employed people, the recurring National Insurance item Nett reserves by default is Class 4:

Profit slice	Class 4 NI rate
£12,570 to £50,270	6%
Above £50,270	2%

Class 2 has been voluntary for many self-employed people since April 2024. Because of that, Nett does not reserve a weekly Class 2 amount automatically. If you record a Class 2 payment as an expense, Nett can detect it as a tax-related payment instead of treating it as ordinary spending.

That is why a rough “Income Tax plus NI” percentage breaks down. Class 4 uses familiar thresholds, but the rates differ and the 2% band keeps going after the upper limit.

VAT: only if you are registered

VAT is separate from profit tax. If you are not VAT registered, Nett does not reserve VAT by default.

If you are VAT registered, Nett separates VAT from your revenue and expenses so the money collected for HMRC does not inflate your Safe to Spend. The standard VAT rate is 20%, with reduced and zero-rated options where relevant.

The registration threshold Nett uses is £90,000 of taxable turnover over a rolling 12-month period. That rolling test is important. It is not just “did I make £90,000 this calendar year?” A strong run of invoices across two calendar years can still push you over the threshold.

The UK tax year is not the calendar year

The UK tax year runs from 6 April to 5 April. Nett uses that year boundary when it estimates your accrued Self Assessment reserve.

Instead of taking one quarter’s profit and pretending every quarter will look the same, Nett looks at year-to-date profit inside the UK tax year. That gives a more realistic reserve when income is uneven, when you start mid-year, or when a large invoice pushes part of your profit into a higher band.

Payments on Account: shown as a cash-flow warning

Payments on Account are one of the reasons freelancers get surprised in January. If your Self Assessment bill is high enough, HMRC may ask you to pay towards next year’s bill in two instalments: one by 31 January and another by 31 July.

Nett keeps this separate. Your Safe to Spend reserve follows the tax accrued from your current profit. Payments on Account show as a cash-flow warning because they depend on last year, the filed return, and HMRC’s decision.

That keeps the estimate honest. You get a warning without Nett pretending to know the official bill before you file.

How Nett reaches the final number

For UK freelancers, the simplified shape is:

Your Nett = business profit + net VAT position - estimated tax reserve

The tax reserve can include:

Accrued Income Tax for the current tax year
Accrued Class 4 National Insurance
VAT due for the period, if VAT registered
Tax payments you already recorded
Carried unpaid obligations from closed periods

When you record a payment to HMRC, Nett uses the real payment instead of continuing to show a theoretical estimate for that item.

This is not official tax advice. It is a working number. If you invoice £3,000, Nett shows the part you can treat as yours after the HMRC money has been moved out of reach.

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Why Nett Uses These Tax Rates for UK Freelancers