How much of your freelance income is actually yours?

If you're self-employed in the UK, you pay Income Tax and National Insurance on your profit, not your turnover. Knowing what you actually owe is the difference between sleeping well and a January panic.

Income Tax starts with a Personal Allowance of £12,570 — you pay nothing on that slice. Above it, you pay 20% (basic rate) up to £50,270, 40% (higher rate) up to £125,140, then 45% (additional rate). The Personal Allowance also tapers above £100,000: you lose £1 of allowance for every £2 you earn over that.

National Insurance has two classes for the self-employed. Class 4 is 6% on profits between £12,570 and £50,270, then 2% above that. Class 2 has been voluntary since April 2024 — it's £3.65 a week and you can choose to pay it to protect your State Pension entitlement.

If your taxable turnover crosses £90,000 in any rolling 12-month period, you have to register for VAT. Below that it's optional, and most freelancers stay out.

One more thing that catches people out: Payments on Account. If your tax bill goes over £1,000, HMRC asks you to prepay next year's tax in two instalments — 31 January and 31 July — each 50% of last year's bill. The Self Assessment deadline itself is 31 January for online filing (31 October if you still file on paper).

Say you earn £45,000 a year and have around £5,000 in deductible business expenses. Your taxable profit is £40,000.

Income Tax works out at £5,486 — that's 20% on the £27,430 above your Personal Allowance. Class 4 NI adds £1,646 (6% on the same band). If you pay voluntary Class 2, that's another £190 (£3.65 × 52 weeks).

Total tax reserve: about £7,322. So out of £40,000 of profit, roughly £32,678 is yours to spend.

Your Nett is the money you can actually spend without touching what you owe HMRC.

This calculator gives you the annual snapshot. The Nett app updates the same number in real time with every invoice and expense you log, so January never surprises you.