Reverse-calculate the gross self-employment income needed to net a target take-home. Useful for freelancers quoting day-rates that need to result in a specific bank-account figure after tax and NI.
PAYE £0 · Self-employment profit £30,000 · Rest of UK
£30k profit covered by £12,570 PA (tax-free), then £17,430 at 20% basic rate = £3,486 income tax. Class 4 NI: £17,430 × 6% = £1,046. Total HMRC bill £4,532. Take-home £25,468 — 85% retention.
£25k PAYE + £8k freelance — basic-rate stacking
PAYE £25,000 · Freelance profit £8,000 · Rest of UK
Day job uses up £12,570 PA. Freelance £8k stacks on top, all in the basic-rate band. £8k × 20% = £1,600 income tax. Below the £12,570 Class 4 NI lower threshold (PA was used by PAYE; £8k of self-employment profit alone wouldn’t trigger Class 4). Take-home £6,400 — 80% retention.
£40k PAYE + £15k freelance — higher-rate stacking
PAYE £40,000 · Freelance profit £15,000 · Rest of UK
PAYE £40k uses up basic-rate band partly. £10,270 of freelance fits remaining basic band at 20%; £4,730 falls into higher rate at 40%. Class 4 NI: £2,430 at 6% (the small portion above £12,570 not used by PAYE). Total HMRC bill £4,092. Take-home £10,908 — 73% retention. Higher marginal rate hit hard.
£60k freelance, no day job — higher-rate band
PAYE £0 · Freelance profit £60,000 · Rest of UK
PA covers £12,570. Basic rate £37,700 × 20% = £7,540. Higher rate £9,730 × 40% = £3,892. Income tax total £11,432. Class 4 NI: £37,700 × 6% = £2,262 + £9,730 × 2% = £194.60 → £2,456.60. Total HMRC £13,889. Take-home £46,111 — 77% retention. Net effective rate ~23% — but the marginal rate above £50,270 is 42%, so the next pound of profit is worth substantially less than the average.
This calculator solves both directions of the freelance tax problem:
Forward: I made £X profit — what’s my take-home?
Reverse: I need to net £Y — what gross profit do I need?
Enter your numbers and the calculator handles the marginal-rate stacking against your PAYE income (if any), Class 4 NI thresholds, and personal allowance taper.
How the maths stacks
UK self-employment income doesn’t get its own personal allowance. It stacks on top of your PAYE income for income tax purposes:
Personal allowance (£12,570) — used against PAYE first, then self-employment.
Basic-rate band (20%) — extends from £12,570 to £50,270 of total income. Self-employment income pushes you up this band.
Higher-rate band (40%) — kicks in once total income exceeds £50,270.
Class 4 NI (6% basic-rate band, 2% above) — calculated on self-employment profit independently of PAYE.
Personal allowance taper — above £100k combined income, PA reduces by £1 for every £2 of income, fully exhausted at £125,140.
The calculator tracks all of this. Output is take-home (after both income tax and Class 4 NI) plus the breakdown.
When the higher-rate band hits hard
Marginal rate of 28% in the basic-rate band sounds fine. Stack onto a £40k day job and the next £10k of freelance income faces:
£10,270 of remaining basic-rate band: 20% income tax + 6% Class 4 NI = 26%
Then 40% income tax + 2% Class 4 NI on income above £50,270
A £10k of freelance profit on top of £40k PAYE nets ~£7,400 (74% retention). The same £10k as the only income would net ~£8,500 (85% retention). PAYE-stacking is the single biggest factor most side-hustlers underestimate.
Reverse-calculate for day-rate planning
If you need to net £40,000 from freelance work as your only income:
Required gross profit: ~£53,500
Income tax: ~£8,540
Class 4 NI: ~£2,460
Take-home: £40,500
A £53,500/year target works out to ~£250/day at 215 billable days. If you bill at £400/day, you need ~134 days billed — leaving ~80 days for prospecting, admin, holidays, sick days. That’s the rough day-rate-to-billing-days mapping for a £40k take-home freelance career.
What’s not modelled (add separately)
Student loan repayments — Plan 2 (9% above £27,295), Plan 5 (9% above £25,000), Plan 4 Scottish (9% above £31,395), Postgraduate (6% above £21,000). Stack on top.
Workplace pension contributions — reduce taxable income at source if salary-sacrifice or net-pay; reduce taxable income via Self Assessment if relief-at-source.
Limited company structures — different tax regime entirely.
HMRC payments on account — 50% of next year’s expected liability paid alongside current year’s bill in January, plus another 50% in July. Doubles year-one cash outlay.
For the more nuanced “should I quit my day job” question, see the earn-to-quit calculator which inverts this maths and answers “what gross profit do I need to replace my current PAYE take-home?”
Common mistakes
Confusing ‘gross’ (revenue) with ‘net profit’. The input here is profit AFTER business expenses. Don’t enter your turnover — enter what’s left once costs are deducted. £30k turnover with £8k expenses = £22k profit. Use £22k as the input.
Forgetting that Class 4 NI thresholds match income tax. Class 4 starts at £12,570 (same as PA). If your day job uses up the PA, your self-employment profit doesn’t get a fresh £12,570 NI-free allowance — Class 4 starts on the first pound of profit. Engine handles this correctly.
Underestimating marginal rates above £50,270. Day job + freelance combined hitting £50,270+ means each next pound of self-employment profit faces 40% income tax + 2% Class 4 NI = 42% marginal rate. Worth knowing before you take that extra commission.
Missing the personal allowance taper above £100k. Combined income above £100,000 starts losing personal allowance (£1 lost per £2 of income). Effective marginal rate hits 60% in the £100k-£125,140 band. If your combined income is in this range, deferring income or making pension contributions can be highly tax-efficient.
Treating the calculator’s net as your usable income. The output is post-tax-and-NI but pre everything else: pension contributions, business expenses you forgot, payments on account on next year’s tax bill, mileage that wasn’t claimed. Real cash usable income is typically 5-15% lower than the calculator’s net for actively-trading freelancers.
What this calculator doesn't cover
Doesn’t include student loan repayments — Plan 1, 2, 4, 5, or Postgraduate. Add 9% above the relevant threshold separately.
Doesn’t include workplace pension contributions or salary sacrifice.
Doesn’t model VAT — only relevant above £90,000 turnover.
Class 2 NI was effectively abolished from April 2024 for most self-employed; voluntary contributions still possible to maintain state-pension records.
Tax bands are 2025-26. April 2026 introduces 2026-27 bands.
Doesn’t account for HMRC payments on account (50% of next year’s expected liability paid in January and July alongside the current year’s bill).
Single tax year — doesn’t model losses carried forward or other multi-year complexity.
Frequently asked questions
What's the difference between this and the side hustle tax calculator?
Same engine, different framing. The side hustle tax calculator is framed as ‘I have a day job and a side hustle, what’s my total tax liability?’ This one is framed as ‘what gross income do I need to net £X?’ — useful for freelancers quoting day-rates that need to result in a specific take-home. Both produce the same numbers; pick whichever framing matches your question.
If my day job covers my personal allowance, am I taxed from the first pound of self-employment?
Yes — for income tax. Personal allowance is allocated against your highest income source first (usually PAYE). Once exhausted, any further income (including self-employment) is taxed from the first pound at your marginal rate. This is why the side-hustle take-home figure is often lower than people expect.
Why is Class 4 NI 6% but Class 1 NI 8%?
Class 1 (employee NI) was reduced to 8% from January 2024. Class 4 (self-employed NI) was reduced to 6% from April 2024. Both still have a 2% rate above the upper threshold (£50,270). Self-employed pay slightly less NI on profits than employees pay on salary at the same level — by ~2 percentage points in the basic-rate band.
Should I incorporate as a limited company?
Sometimes worth considering above £30-£50k profit. Limited companies pay corporation tax (19-25%) and you draw income via salary + dividends with separate tax rates. Adds £600-£1,500/year of accountancy cost. Generally worth modelling explicitly with an accountant once profit consistently exceeds £30k. For sole-trader maths only, this calculator is sufficient.
Does this work for partnerships or LLPs?
Partly. Partnership/LLP profits are allocated to partners and taxed at their personal marginal rates — the calculator gives you each partner’s individual liability if you input their share of profit. Complications around capital introduced/withdrawn, salaried members rules, and partnership-level adjustments aren’t modelled.
What about the £1,000 trading allowance?
If your gross self-employment INCOME (not profit — gross before expenses) is under £1,000, you owe no tax and don’t need to register for Self Assessment. The trading allowance is a flat £1,000 deduction you can use INSTEAD of expenses if your real expenses are under £1,000. Use the trading allowance calculator for the threshold check; this calculator assumes you’ve already netted off either the allowance or actual expenses.
How do I plan for the tax bill?
Set aside ~30% of self-employment profit in a separate account from day one. Most successful freelancers maintain a ‘tax pot’ that covers the full Self Assessment plus payments on account (which double the bill in year one). The 30% rule is conservative for basic-rate but undercovers if you push into higher rate — recalculate using this calculator for your specific income mix at year-end and top up the pot if needed.
About this calculator. Maintained by Jordan —
a UK seller and creator who actually uses these platforms (Etsy, eBay, Vinted, DistroKid).
Built to be accurate, mobile-fast, and honest about its limits. Spot a bug? Email
hello@payoutmath.co.uk.