Tax Reserve Calculator.
How much to put aside each month, so January never hurts — sole traders and landlords.
For sole traders and landlords: Income Tax and Class 4 NI on your expected profit, turned into a monthly standing-order figure. First-year businesses get an uplift for payments on account — the rule that makes the first January bill roughly half as big again. Everything runs in your browser — your figures never leave it. Estimates are general information, not advice: ask us about your own position.
The January vaccine
Put the taxman's share aside before it feels like yours.
The cruellest thing about self-employment is that the money arrives gross. It sits in your account looking like yours, and eighteen months later Self Assessment asks for a slice of it back — plus, the first time, a 50% deposit on next year through payments on account. The January panic is not a tax problem; it is a timing problem. This calculator turns your expected profit into one unglamorous, life-changing number: what to move into a separate account every month.
It works the 2026/27 sums properly — Income Tax through the bands, Class 4 National Insurance at 6% and 2% — and shows the payments-on-account effect that doubles so many first bills. The method is old-fashioned and infallible: a second bank account, a standing order the day you pay yourself, and the discipline never to look at that balance as spendable.
From April 2026, sole traders and landlords with qualifying income over £50,000 are also in Making Tax Digital for Income Tax — digital records and quarterly updates to HMRC. The quarterly rhythm actually helps with reserving: you see the liability building in-year instead of discovering it in January.
Common questions.
How much should a sole trader put aside for tax?
Rules of thumb (20–30%) miss payments on account and the Class 4 NI bands, which is why first-year bills shock people. Run the actual numbers: this calculator applies the 2026/27 bands to your expected profit and includes the on-account effect, then divides by twelve. For most profitable sole traders the honest figure is nearer 25–35%.
What are payments on account?
Advance payments toward next year's tax bill: two instalments, each half of this year's liability, due 31 January and 31 July. Your first year over the threshold, you pay the year's bill plus the first instalment at once — roughly 150% of what you expected. They can be reduced if you know profits are falling, but reduce them too far and HMRC charges interest.
Does MTD for Income Tax change what I owe?
No — it changes how you keep records and report. From April 2026, sole traders and landlords with qualifying income over £50,000 must keep digital records and send quarterly updates (due 7 August, 7 November, 7 February and 7 May). The tax and its payment dates stay the same, but you will see the liability building through the year.
Should the reserve sit in a separate account?
Yes — physically separate, ideally at a different bank, ideally earning interest. The entire trick is that money you cannot see is money you do not spend. A standing order on the day you pay yourself makes it automatic; willpower is not a system.
Keep going.
My Tax Calendar
31 January, 31 July, quarterly MTD updates — subscribed to your phone, with reminders.
Open →Making Tax Digital
Over £50k? MTD ITSA starts April 2026 — we set the software up and run the quarters.
Open →Take-Home Pay Calculator
Comparing self-employment with a salaried offer? See the employed side properly.
Open →Prefer a human with the numbers?
If last January hurt, the fix costs one standing order — and we will happily work out the right amount with you.