Self employed income tax calculator?

A question about : Self employed income tax calculator?

I've been self employed since November 2007 and am about to withdraw my first wage. I have 2 business bank accounts, the second of which I'm going to save my tax in. Are there any online calculators that can work out how much tax I need to set aside, or does anyone know the exact levels and breaks for this year?

Cheers,

Chris.

Best answers:

• Don't forget that you will pay tax on your profit, not your drawings. You therefore need to be keeping an eye on your profit margins and putting away about 30% of that to cover tax and NIC's.
• Are your affairs simple enough that a salary calculator would be good enough to give you an idea of your tax? If you search for 'income tax calculator' or 'salary calculator' you should find a few options. But obviously it would only work for your profit, as the OP said.
• Thanks for that info.
  One thing complicating matters for me right now is that I dont know how much I'll be drawing over the year. It could vary between Ј20 and Ј40k.
  I'll probably be drawing as little as possible this year, so assuming that once all expenses are taken out I'll be in the 22% tax bracket, should I just cover myself by setting aside 25% (excluding NI) of anything I make?
  Good idea about a high interest savings account. Though I can then get taxed on any interest I make, right? The cheek.
  Chris.
• PS does can the savings account be a personal one or does it have to be business? Sorry if thats a stupid question - the rates seem higher on some personal ones.
• If the money is your earnings that you have taken out of the business and you are putting aside to save for your personal income tax bill, I don't see why it should need to be a business account. And if you don't have a cash isa, you could look into that.
  If you put aside 25% you shouldn't be too far out. Remember that you don't pay tax on the first Ј5000 or so, and at the moment we've still got a 10% band for the next Ј2000 approx, so if you put aside 25% from the start you are a bit ahead of the game. Then as you get closer to the 40% tax bracket, you could up what you save.
  https://www.hmrc.gov.uk/rates/it.htm
• https://www.listentotaxman.com/index.php
• Oh, and another thing - it is way out of my knowledge, but if you are looking at making a substantial profit, it might be a good idea to talk to an accountant to see if it would be worth becoming a limited company?
• Do NOT use an income tax calculator for those who are employed as you will be taxed differently.
  If you started SE in November 2007, then you will have submitted a tax return (self assessment ...? and online ...?) and you should see your tax bill there. You should have paid your tax for 2007/08 and 2008/09 by now. In January, you should have paid the first instalment, on account, for this year.
  You should be able to estimate your profit for this year by now, as well - assuming your accounting year runs alongside the tax year (as there's only a week left in the current tax year).
  You should be able to get a good estimate of the tax you need to pay for the current tax year, based on your profit to date. If you deduct the first instalment that you paid in January, the balance is due in July. Then, half the total for last year is due next January together with any balancing payment for this year. These are the tax figures you need to work with.
  When you draw money from your profit, it affects "nothing". It doesn't go through the P&L, doesn't need any tax deducting and doesn't need to be recorded, unless you keep a balance sheet.
  Holding back 30% from your drawings is not sufficient. You need to hold back roughly 30% from your profit. If you can run your P&L on a monthly basis, it's easier to do this.
• I've used https://www.selfemploymentcalculator.com, which for my last year's figures was spot on.
  I don't think it calculates tax if you're a higher rate taxpayer i.e. earning above certain income tax / NI amounts, but for everything else it seems to do the job.
• I know a great website that is a self employed tax calculator.
  All you need to do is put in your invoices, and expenses and it will work out what you owe the tax man, its brilliant.
  it will even work out two income streams, so if for instance you are employed on a full time bases and pay PAYE, you can put a seconf income "self employed" into the system and it will workout your tax, minus what youve all ready paid in PAYE.
  Its the way to go, no more expensive accountants.
  Unfortunatly i am not allowed to post links on this forum, so if you want to find it. cut and paste this into google, incude the quotes and look for the 4th one down. "self-employed-tax-calculator"
  good luck!!!