UK Self Assessment Tax Bill: Income, Expenses and Payments on Account

Turnover is not taxable profit

Turnover is the income received by the business. Taxable profit broadly starts after allowable business expenses are deducted, subject to the detailed rules and any capital allowances.

Entering turnover as self-employment profit overstates the calculator result. Private spending and amounts already included elsewhere should not be deducted twice.

Example: A sole trader with £48,000 of turnover and £13,000 of allowable business expenses starts with £35,000 of profit, not £48,000.

Related: Estimate a UK tax refund →

What the bill can contain

Income Tax is calculated after allowances and reliefs. Class 4 National Insurance can apply to self-employment profit. Student-loan repayments can also be collected through Self Assessment.

Payments on account are advance instalments toward the following year. They affect cash due at the deadline but do not mean the same income is taxed twice.

• ✓ Income Tax
• ✓ Class 4 National Insurance
• ✓ Student or postgraduate loan repayment
• ✓ First payment on account
• ✓ Any balancing payment from the previous year

Related: Pension tax relief explained →

Use the ToolsFA calculator step by step

Select the UK country whose Income Tax bands apply, then enter employment income and PAYE tax only if you also had a job or pension taxed through PAYE. Enter self-employment profit after allowable expenses in the self-employment field; do not enter turnover and then deduct the same expenses elsewhere.

The calculator estimates Income Tax, Class 4 National Insurance and supported student-loan repayments. It does not prepare a return or model capital allowances, loss relief, Capital Gains Tax, every benefit, Making Tax Digital submissions, penalties, interest or the cash timing of payments on account.

• ✓ Reconcile annual turnover
• ✓ Deduct only eligible business expenses
• ✓ Enter the resulting taxable profit
• ✓ Add PAYE income and tax already deducted once
• ✓ Compare the estimated liability with tax already paid

Related: Student-loan repayments →

Plan the cash due, not only the tax liability

Under the current rules, HMRC normally asks for two payments on account when the previous year’s relevant Self Assessment tax was at least £1,000 and no more than 80% was collected outside Self Assessment. Each instalment is usually half the previous year’s amount and is due on 31 January and 31 July.

A first-time filer can therefore face the full bill for the completed year plus the first payment on account for the next year on the same 31 January date. Payments on account generally cover Income Tax and Class 4 National Insurance; capital gains and student-loan repayments are handled in the balancing payment.

The government announced on 28 October 2026 that it intends to replace the current twice-yearly payment-on-account system with smaller, more regular payments. Detailed design and further information are expected in 2027. Until HMRC publishes operative dates and rules, use the amounts and deadlines shown in your Self Assessment statement rather than assuming the announced model already applies.

Example: Assume a first Self Assessment calculation shows £4,000 of Income Tax and Class 4 National Insurance, with no payments on account already made and no exception. Under the current rules, the illustrative 31 January cash requirement is £6,000: the £4,000 bill plus a £2,000 first payment on account. A second £2,000 payment would normally follow on 31 July.

Check whether Making Tax Digital applies from April 2026

Making Tax Digital for Income Tax is now mandatory for a first group of sole traders and landlords. If 2024–25 gross qualifying income from self-employment and property was more than £50,000, the person should have started using the system from 6 April 2026. The threshold is based on qualifying income before expenses, not the taxable profit entered in the ToolsFA calculator.

HMRC says the threshold falls to more than £30,000 of 2025–26 qualifying income for a 6 April 2027 start, then more than £20,000 of 2026–27 qualifying income for a 6 April 2028 start. Those in scope need compatible software for digital records and quarterly updates as well as the year-end tax return. ToolsFA estimates annual tax; it does not keep digital records, send quarterly updates, sign anyone up or replace compatible filing software.

• ✓ Check gross self-employment and property income, not profit
• ✓ Use the tax year HMRC specifies for the threshold test
• ✓ Confirm the start date even if an HMRC letter did not arrive
• ✓ Choose compatible software for records and quarterly updates
• ✓ Keep the ToolsFA annual estimate separate from MTD submissions

Example: A sole trader reported £58,000 turnover and £18,000 allowable expenses in 2024–25, with no property income. The ToolsFA profit input would be £40,000, but the MTD qualifying-income test starts from £58,000 gross income, so the person should check the requirement to use MTD from 6 April 2026.

Records that make the estimate stronger

Reconcile invoices, bank transactions and receipts rather than guessing a round expense total. Separate business and private use and keep the evidence supporting every expense; HMRC does not require proof with the return but can ask for it.

If you also have PAYE income, enter the gross pay and PAYE Income Tax deducted so the calculator can reconcile both parts of the year. Check the final estimate against the SA302 tax calculation and Self Assessment statement before paying.