£20,000 self-employed is £18,068 after tax
On £20,000 of trading profit you pay £1,486 in income tax and £446 in Class 4 National Insurance. That is £1,932 in total, leaving £18,068 — an effective rate of 10%, well below the headline band rate because the first £12,570 is untaxed. Figures for 2026/27, checked 28 August 2026.
| Trading profit | £20,000.00 |
| Income tax | −£1,486.00 |
| Class 4 NI (6% on £12,570–£50,270) | −£445.80 |
| Take-home | £18,068.20 |
| Per month | £1,505.68 |
Against £20,000 as a salary
Income tax is the same either way — £1,486 — because it does not care how you earned the money. National Insurance is where they part. An employee on £20,000 pays £594 in Class 1; you pay £446 in Class 4, which is £149 less. That gap is the whole of the tax advantage, and it buys you no holiday pay, no sick pay and no employer pension contribution — which are worth considerably more than £149 to most people.
Budget for £2,898 in your first January. A bill of £1,932 is over the £1,000 threshold, so HMRC also wants two payments on account of £966 towards next year. The first falls due on 31 January with the balancing payment, the second on 31 July. Nobody warns you about this in year one.
Put your own figure in with the self-employed tax calculator. See what £20,000 looks like as a salary if you are weighing a job against it. Contracting through a company instead is priced by the outside IR35 calculator.
Nearby profits
How much tax will I pay on £20,000 self-employed?
£1,932 in total — £1,486 income tax plus £446 Class 4 National Insurance. That leaves £18,068, an effective rate of 10%.
Is £20,000 self-employed better or worse than the same salary?
Better, on National Insurance. An employee on £20,000 pays £594 in Class 1, against £446 in Class 4 here — £149 less. Income tax is identical at £1,486, because it does not care how the money was earned. What self-employment does not buy you is holiday pay, sick pay or an employer pension contribution.
Do I have to make payments on account on £20,000?
Yes. Your bill of £1,932 is over the £1,000 threshold, so HMRC asks for two payments on account of £966 each towards next year — the first due 31 January alongside this year's balancing payment, the second on 31 July. In your first year that means paying roughly £2,898 in one January.
Is this profit or turnover?
Profit — turnover minus allowable expenses. If your turnover is under £1,000 you may not need to report it at all, and above that you can deduct the £1,000 trading allowance instead of expenses if that comes to more.
Rates for 2026/27 from gov.uk, checked 28 August 2026. Last updated 28 September 2026. Not tax advice.