← What’s new?
Sole traders10 October 2026·5 min read

How to save for tax when you're self-employed in the UK

How to save for tax as a self-employed person in the UK: a simple percentage, a separate pot and the 31 January and 31 July dates, with a worked example.

A teal piggy bank beside a jar and a small wooden chest, with a squirrel dropping a coin into the jar and a tortoise guarding the chest

If you're self-employed, nobody takes tax off your pay. Every payment lands in full. That feels great until the bill arrives. Here's how to save for tax in the UK so the bill is boring.

Know what you're saving for

HMRC bills you on your profit, not your takings. Profit is income minus allowable expenses.

For the 2026 to 2027 tax year, GOV.UK's Income Tax rates page lists a Personal Allowance of £12,570. You pay 20% on profit from £12,571 to £50,270. Higher rate is 40% up to £125,140. Scotland has different bands.

On top of that, GOV.UK's self-employed National Insurance page says you pay Class 4 National Insurance of 6% on profits from £12,570 to £50,270, and 2% above that. Most people pay it through Self Assessment, along with the Income Tax.

Step 1: Work out a rough percentage

Say you're a cleaner with a £30,000 profit in 2026 to 2027. This is an example, not your number.

  • Income Tax: (£30,000 minus £12,570) at 20% is £3,486.
  • Class 4 National Insurance: £17,430 at 6% is £1,045.80.
  • Total: £4,531.80. That's about 15% of your profit.

So at that profit, roughly 15p of every £1 of profit is HMRC's. Your own number will differ. You might have student loan repayments, other income or a different tax bracket.

My suggestion is to round up. Save 20 to 25% of what comes in after your costs, at least until you've done one full tax year and know the real figure. That's my rule of thumb, not an HMRC rule. A bit too much is a nice surprise. Too little is a loan from HMRC you didn't ask for.

Step 2: Move the money the day it lands

Don't wait until the end of the month. The moment a customer pays, move your percentage into a separate pot.

Use a savings pot, a second account, whatever your bank gives you. If you read my post on whether you need a business bank account, you'll know I like keeping business money apart. A tax pot is the same idea, one step further.

Do it by hand if you must. A small transfer each time is easier than a large one in January. If you want it to happen without thinking, set a standing order for a fixed amount each week. Raise it after a busy month.

Step 3: Know the dates

GOV.UK's Self Assessment deadlines page says that for the 2025 to 2026 tax year, the online return and the tax you owe are both due by 11:59pm on 31 January 2027.

Then there's a catch that surprises people: payments on account. GOV.UK's payments on account guidance says each payment is usually half of the tax you owed the previous year. They're due by midnight on 31 January and 31 July.

You don't have to make them if last year's tax was under £1,000, or if you paid more than 80% of it outside Self Assessment.

Here's what that means in your first year. GOV.UK says that if you made no payments on account the year before, you pay the full tax bill plus the first payment on account by 31 January. Say your bill is £4,500. The first payment on account is half of that, £2,250. So £6,750 is due by 31 January. The second £2,250 is due on 31 July.

That's why the pot matters. In your first year you may need about one and a half times your yearly tax in the bank by the end of January. This is my reading of GOV.UK's example, so check your own figures in your HMRC online account. GOV.UK says you can see them by selecting your latest return and choosing "View statements".

Step 4: Pay early enough

GOV.UK's page on paying your bill says payments by online or telephone banking, CHAPS or debit card usually arrive the same or the next day. Bacs, or a Direct Debit you've already set up with HMRC, takes 3 working days. A Direct Debit you haven't set up before takes 5 working days.

Don't pay on the last day. Pay a week early and forget about it.

Step 5: Chase your own money

Your tax pot only works if customers pay on time. A late £500 can mean a short pot. If you have a late payer, chase them early and politely. Don't dip into the tax pot to cover it unless you can top it up soon.

What if you can't pay in full?

Don't ignore it. GOV.UK's page on difficulties paying HMRC says you may be able to set up a payment plan to pay in instalments. HMRC checks whether the plan is affordable. If no plan is agreed, HMRC will ask you to pay in full. GOV.UK also says that if you pay late you'll be charged interest, and you may be charged a penalty.

My take

Saving for tax isn't hard. It's just easy to put off. Pick a percentage, move the money on the day, and put 31 January and 31 July in your calendar.

At Vcents, we help you get paid straight into your own bank account, and the chat shows who has paid. Knowing what's landed makes it easier to know what to set aside.

Sources

Vcents turns the thread into a payment.

Ask for money in plain English. Your customer taps once, authorises in their own bank, and the receipt lands back in the chat.

How receiving payments works