Employee vs self-employed tax
rates verified 24 Jul 2026 · next refresh after Autumn Statement
Direct answer
Income tax bands are identical for employees and the self-employed: PA £12,570, basic 20%, higher 40%, additional 45%1. The difference is NI: employees pay Class 1 at 8%/2%; the self-employed pay Class 4 at 6%/2% on profits, plus voluntary Class 2 at £3.65 per week1011.
Comparison at common profit/salary levels (2026/27)
| Gross / Profit | Employee tax + NI | SE tax + NI | SE saving |
|---|---|---|---|
| £25,000 | £3,480 | £3,232 | £248 |
| £40,000 | £8,672 | £8,134 | £538 |
| £60,000 | £15,532 | £14,994 | £538 |
Where the comparison ends
The trading allowance (£1,000) and the lack of employer pension, sick pay and holiday pay are non-tax differences. Self-assessment also brings cash-flow timing and payment-on-account considerations.