What's different for UK self-employed people
If you're a sole trader or contractor in the UK, a few things work differently from being an employee. Keep them in mind when you use our calculators.
You pay tax through Self Assessment
No employer takes tax from your pay through PAYE, so you report your income and pay tax once a year with a Self Assessment tax return. As well as Income Tax, self-employed people usually pay National Insurance on their profits. See Self Assessment tax returns and self-employed National Insurance on GOV.UK.
Payments on account make your first bill bigger
Once your tax bill is large enough, HMRC asks you to pay towards next year's bill in advance, in two "payments on account". In your first year this can mean paying your whole first year's bill plus half of the next one at the same time, so set money aside from the start. See payments on account.
Contractors need to check IR35
If you work through your own limited company, the IR35 rules decide whether a contract is taxed like employment. It can make a big difference to your take-home pay. HMRC's Check Employment Status for Tax (CEST) tool helps, and an accountant can review contracts you're unsure about.
Bank holidays are unpaid
England and Wales usually have 8 bank holidays a year. Scotland and Northern Ireland have different ones, so check the GOV.UK bank holidays list for your nation. Add them to your days off in our day rate calculator.
You can charge interest when business clients pay late
If a business pays you late and your contract doesn't set a rate, you can usually claim statutory interest of 8% plus the Bank of England base rate, and fixed compensation of £40 to £100 per invoice. Our late payment interest calculator does the maths using official figures.
Tip: GOV.UK's Working for yourself guide is the best free starting point for UK rules.