UK tax questions, answered plainly.

What is Self Assessment?

Self Assessment is HMRC's system for collecting Income Tax on money that isn't automatically taxed at source — most commonly self-employment profit and dividend income. If you're a sole trader, a company director taking dividends, or you have other untaxed income above certain thresholds, you'll usually need to register and file a Self Assessment tax return.

The tax year runs from 6 April to the following 5 April. If you file online, your return and first payment are due by the following 31 January — so the 2026/27 tax year (6 April 2026 to 5 April 2027) has a filing and payment deadline of 31 January 2028.

What are "payments on account"?

Payments on account are advance payments toward next year's tax bill, required once your Self Assessment liability exceeds £1,000 and less than 80% of your tax is already collected at source (e.g. via PAYE). HMRC splits the estimate into two instalments — 31 January and 31 July — each equal to half of what you owed the previous year.

The tricky part: they're based on last year's actual bill, not this year's real income. That's why someone with a one-off high-earning year can face a much bigger bill than expected 18 months later, and why the first year this applies can mean paying 150% of your actual liability in one go (this year's full bill plus half of next year's estimate, both due the same January). Our calculator's 18-month cash-flow timeline is built specifically to show this coming in advance.

How is UK Income Tax calculated?

UK Income Tax is banded, not a single flat rate. You get a tax-free Personal Allowance, then income above that is taxed in bands — currently basic rate, higher rate, and additional rate — with each band only taxing the portion of income that falls within it, not your whole income. Dividend income uses its own, separate set of rates and its own small tax-free allowance.

Scotland has its own Income Tax bands for salary and self-employment profit (more bands, different thresholds), set by the Scottish Parliament — though dividend tax stays on the same UK-wide rates regardless of where you live. Our calculator models both England/Wales/NI and Scottish bands.

Self-employed, company director, or employed — how does tax differ?

Employed: tax and National Insurance are deducted automatically through PAYE as you're paid. In most cases there's no Self Assessment bill or payments on account unless you have other untaxed income.

Self-employed (sole trader): you pay Income Tax and Class 4 National Insurance on your profit (turnover minus allowable expenses) through Self Assessment — nothing is deducted at source, so you're responsible for setting money aside yourself.

Company director: typically paid a mix of salary (taxed via PAYE, like an employee) and dividends (taxed separately, at source dividend rates, with nothing deducted automatically — the dividend tax is what actually drives your payments on account).

Is this calculator free, and is it tax advice?

The calculator itself is completely free to use, with no account required. Creating a free account lets you save scenarios and compare them side by side.

It's not tax advice — it's a planning estimate. We're upfront about what it deliberately doesn't model (Capital Gains Tax, Marriage Allowance, Personal Allowance tapering above £100,000, and a few other less common reliefs) so you can rely on it for what it does cover without assuming it covers everything. For anything complex, an accountant or HMRC's own guidance should have the final word.