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From 6 January 2024, the main rate of class 1 National Insurance contributions (NIC) deducted from employees’ wages is reduced from 12% to 10%. From 6 April 2024, the main rate of self-employed class 4 NIC will reduce from 9% to 8% and class 2 NIC will no longer be due. Those with profits below £6,725 a year can continue to pay class 2 NIC to keep their entitlement to certain state benefits. Our guidance will be updated in full in spring 2024.

Updated on 6 April 2023

Self assessment tax calculations

A key part of self assessment is calculating your own tax (and, if appropriate, National Insurance contributions and student loan repayments) for the tax year and including this on the tax return. This does not have to be as daunting as it sounds.

Content on this page:

Filing online

HMRC’s system (or third-party software, if you choose to use it) will calculate how much you owe. You can view the calculation online or print it out.

Filing on paper

HMRC will work out how much you owe based on the entries on the tax return and send you the tax calculation. This is known as a form SA302. Provided you submit the paper return by the due date, HMRC guarantee they will let you know what payment you need to make before it becomes due.

However, if you submit the return late, then although HMRC will still do the calculation for you, they cannot be sure this will be done in time for you to make the right payment by the due date.

Therefore, if you submit a paper tax return late, you run the risk of also making the self assessment payment late, for which penalties and interest may become payable. These are on top of penalties for late filing.

Tax paid at source

You may already have had tax deducted from some income, for example if you are registered under the construction industry scheme (CIS) or you are employed and self-employed.

In this situation you include all the income on the tax return, whether or not it has already been taxed, and also include the tax that has been deducted at source. The tax calculation will automatically take account of any tax paid at source (for example, through CIS or PAYE) that has been included on the tax return.

The tax calculation will then show the amount that is left to be paid through self assessment or to be refunded, although it might need to be adjusted for any payments on account already made, as we explain below. 

Payments on account

If you are in scope to make payments on account, any payments on account already made should be compared to the final position shown by the calculation to see whether there is any further amount to pay (known as the balancing payment) or whether a refund is due.

You do not include any tax paid as a payment on account anywhere on the tax return form itself.

Example

Chloe is employed part-time and also runs her own business. During the 2022/23 tax year she earns £15,000 from her job and pays tax through PAYE of £486. She also earns profits of £4,000 from her self-employment.

When Chloe completes her 2022/23 tax return, she includes all her employment income and tax deducted through PAYE and her self-employment profits. Her tax calculation will look as follows (ignoring National Insurance contributions for this illustration):

Tax calculation
 

£

Employment income

15,000

Self-employment profits

4,000

Total income received

19,000

minus Personal Allowance

-12,570

Total income on which tax is due

6,430

Income tax due at 20%

1,286

minus tax deducted via PAYE

-486

Total income tax due by 31 January 2024

800

If Chloe had had higher profits in the 2021/22 tax year, she might have been due to make payments on account totalling £1,200 for the 2022/23 tax year.

Let’s say she paid £1,200 in total via payments on account, as follows:

  • 31 January 2023: £600
  • 31 July 2023: £600

When Chloe submits her 2022/23 tax return online in November 2023, her total income tax due would still show as £800 even though she is actually due a refund of £400 (the £800 she owes, minus the £1,200 she has paid) as she has overpaid her tax through payments on account. Chloe will need to deduct her payments from the online calculation to work out she is due a refund. After the online tax return has been automatically processed, Chloe should be able to see that she is due a refund in her HMRC personal tax account and claim this back from HMRC.

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