How the self assessment calculation works
HMRC calculates your self assessment bill by adding together all your taxable income, deducting your personal allowance, and then applying the relevant tax rates to what remains. Different types of income are taxed in a specific order: non-savings income first (employment, self-employment, rental), then savings interest, then dividends. This matters because dividends attract lower rates but are taxed last, which means they sit on top of your other income when determining which band they fall into.
Add up all income sources
Total gross income includes your employment salary, self-employment net profit, rental profit after allowable expenses, gross savings interest, and gross dividends. If your income exceeds £100,000, your personal allowance tapers by £1 for every £2 over that threshold, disappearing entirely at £125,140.
Apply income tax bands
After deducting the personal allowance, income is taxed at 20% (basic rate), 40% (higher rate above £50,270), and 45% (additional rate above £125,140). Scottish taxpayers have different rates and bands, including a 19% starter rate and 21% intermediate rate. Savings income benefits from a personal savings allowance of £500 for higher rate taxpayers or £1,000 for basic rate payers.
Calculate National Insurance
Employee NI applies to employment income at 8% between £12,570 and £50,270, and 2% above that. Self-employed Class 4 NI applies to profits at 6% between £12,570 and £50,270, and 2% above. There is no NI on rental income, savings interest, or dividends.
Deduct tax already paid
If you receive a salary, your employer will have deducted income tax and employee NI through PAYE. The self assessment return reconciles the full liability against what was collected. Any shortfall is the balance owed; any excess is refunded.
Payments on account
If the tax not collected at source exceeds £1,000 and represents more than 20% of your total bill, HMRC requires you to make advance payments towards next year's liability. Each payment on account is 50% of this year's non-PAYE tax bill, due on 31 January and 31 July.
| Band (England, Wales, NI) | Income | Rate |
|---|---|---|
| Personal allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 to £50,270 | 20% |
| Higher rate | £50,271 to £125,140 | 40% |
| Additional rate | Over £125,140 | 45% |
Personal allowance taper: If your income exceeds £100,000, you lose £1 of personal allowance for every £2 earned above that figure. At £125,140 the personal allowance is nil, which creates an effective 60% marginal tax rate on income between £100,000 and £125,140. Pension contributions or Gift Aid donations can reduce your adjusted net income and restore some or all of your allowance.
What your results mean
The balance owed to HMRC is the figure that appears on your self assessment statement after the return is processed. This must be paid by 31 January following the end of the tax year. For 2026/27 income, the payment deadline is 31 January 2027. If you miss this date, HMRC charges a 5% late payment penalty on top of daily interest.
The payments on account figures are advance payments towards your 2026/27 tax bill. The first is due on 31 January 2027 (at the same time as your balancing payment), and the second on 31 July 2027. If you expect your income to be lower next year, you can apply to reduce them through your HMRC online account. If you reduce them incorrectly, HMRC will charge interest on the underpayment.
If the calculator shows a refund, this means more tax was deducted through PAYE than was actually owed. HMRC will repay this after your return is processed, usually within a few weeks. You can also request the refund to be offset against a future payment on account.
Frequently asked questions
You must register for self assessment if any of the following apply: you are self-employed with profits over £1,000; you received rental income; you have untaxed income over £2,500; you received dividends and are a higher or additional rate taxpayer; your income exceeded £100,000; or you received income from abroad. HMRC also requires a return if you claimed certain reliefs or had Capital Gains. The deadline to register for the 2026/27 tax year is 5 October 2026.
For the 2026/27 tax year, there are three key dates. 31 October 2026 is the deadline for paper returns. 31 January 2027 is the deadline for online returns and for paying any balance owed plus your first payment on account. 31 July 2027 is the deadline for your second payment on account. Missing the January deadline triggers an automatic £100 penalty even if no tax is owed, rising to further penalties after three and six months.
This is the personal allowance taper trap. For every £2 you earn over £100,000, you lose £1 of your £12,570 personal allowance. This means the income in this band is effectively taxed at 60%: 40% income tax plus the benefit of losing the allowance. Making pension contributions or charitable donations via Gift Aid can reduce your adjusted net income below £100,000 and restore your full allowance, which is one of the most valuable tax planning opportunities available.
Yes. If you believe your next year's tax bill will be lower than the current year, you can apply to reduce your payments on account by logging into your HMRC online account and completing form SA303. You need a reasonable basis for the reduction, for example, you have stopped trading, your rental income has dropped, or you have made a large pension contribution. If you reduce them by too much, HMRC will charge interest on any underpayment when the actual bill is known.
Rental income is subject to income tax but not National Insurance. You enter your net rental profit after deducting allowable expenses such as letting agent fees, maintenance costs, insurance, and ground rent. Mortgage interest is no longer fully deductible. Under Section 24 rules, you instead receive a 20% tax credit on finance costs. This means higher and additional rate landlords pay more tax than they did previously. The rental income is added to your other income and taxed at your marginal rate, which means it is often taxed at 40% or 45% if you have significant other earnings.
Related calculators
Tax Toolkit UK provides free calculators for guidance purposes only. Results are estimates based on HMRC rates for the 2026/27 tax year. Individual circumstances vary. Always consult a qualified tax adviser before making financial decisions.