Written by the TaxTune Editorial Team · Reviewed by our qualified accountants · Updated for 2026
The quick answer Set aside a share of every payment you receive into a separate savings account, so the tax is covered before it is due. As a rough guide, the self employed often set aside around 25% to 30% of profit, more at higher rates, plus extra for payments on account in the first year.

How to budget, step by step

  1. Open a separate tax pot. A dedicated savings account you do not dip into.
  2. Set a percentage. Move a share of each payment across, guided by your tax rate.
  3. Allow for National Insurance. Remember Class 4 National Insurance sits on top of income tax for the self employed.
  4. Plan for payments on account. If your bill tops £1,000, budget for the extra January instalment toward next year.
  5. Review as income grows. If profits rise into a higher band, increase the percentage you set aside.

Why it works

Tax feels painful when it arrives all at once from money you have already spent. Setting it aside as you earn turns a large January bill into money that is already waiting. It also removes the temptation to spend what was never really yours to keep.

Want to know your exact number?

A rule of thumb is a start, but your real figure depends on your income, expenses and reliefs. TaxTune works out precisely what to set aside so you are never caught short.

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Frequently asked questions

How much should I set aside for tax?

As a rough guide, the self employed often set aside around 25% to 30% of profit, more if you are a higher rate taxpayer, plus extra for payments on account in the first year.

Should I keep tax money in a separate account?

Yes. A dedicated pot you do not dip into keeps the tax safe and removes the temptation to spend money that is really owed to HMRC.

Do I need to budget for National Insurance too?

Yes. For the self employed, Class 4 National Insurance sits on top of income tax, so include it when working out how much to set aside.

What are payments on account and how do I budget for them?

They are advance instalments toward next year, due if your bill is over £1,000. In the first year, budget extra for January to cover both the bill and the first instalment.

How do I know my exact figure?

A percentage is a starting point, but your real figure depends on your income, expenses and reliefs. An accountant can calculate it precisely so you set aside just the right amount.