Chapter 3

Tax returns & calculating your self-employment tax

We explore how to inform HMRC if you have self-employment income and how to calculate your income tax payments.

Illustrated purple claculator on stack of papers, next to a cup of coffee.

Will HMRC tell me if I need to do a tax return?

It’s up to you to inform HMRC if you have self-employed income and need to file a self assessment tax return. Use this handy tool on their website to check if you are not sure.

Once you are registered for self assessment, HMRC should send a notice by post or email reminding you to complete your self assessment tax return.

How do I calculate self-employment tax for the 2022/23 tax year?

The following applies to the 2022/23 tax year. Please note that the below rates do not apply to Scottish taxpayers. Learn about Scottish income tax rates here.

If you are self-employed you will pay income tax on profits above £12,750 (this is assuming you have no other taxable income from a PAYE job). To calculate your profits for the tax year, you deduct your business expenses from your total income.

You will then need to pay income tax at a rate of:

  • 20% on profits between £12,571 and £50,270.
  • 40% on profits between £50,271 and £150,000.
  • 45% on profits over £150,000.

If you are both employed and self-employed, the amount of tax you owe will depend on your combined total income and how much tax you have already paid through your PAYE job. You will need the information on your P60 from your employed job to complete your self assessment.

You need to include details of other taxable income, such as savings or rental income, on your self assessment return. There is help on how to complete a self assessment tax return on the gov.uk website.

You may find it easier to use an accountant to complete your tax return. You can find one using our advisor directory.

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