PAYE vs Self-Employed Take-Home Calculator
United Kingdom – Tax
Compare PAYE and self-employed take-home pay
See how take-home pay differs between a PAYE employee and a self-employed worker in the UK, where income tax and National Insurance rules diverge.
What this calculator does
Compare estimated take-home pay for PAYE employees and self-employed workers in the UK to highlight how tax and National Insurance rules affect net income under common scenarios.
Who should use this calculator
Employees considering self-employment, contractors comparing net pay, and advisors helping clients evaluate employment models will find this comparison useful for high-level planning.
How this calculator works
The interactive client simulates simplified tax and National Insurance treatments for both PAYE and self-employed scenarios, applying standard rates and thresholds to compute comparative take-home estimates. It runs client-side for a responsive, privacy-first experience.
How to interpret your result
Results are indicative comparisons showing approximate net differences. They do not replace professional tax advice and omit many business expenses, allowable deductions, and advanced tax planning considerations.
Example
For the same gross income, a PAYE employee and a self-employed contractor may see different net outcomes due to differences in National Insurance classes, deductible business expenses, and allowable reliefs. Use the interactive client to explore examples.
Limitations & disclaimer
This comparison is high-level and omits detailed business tax rules, VAT, and contractor-specific allowances. Consult an accountant or HMRC for precise tax treatment and compliance guidance.
FAQs
Do self-employed people pay less tax than employees?
Not necessarily. Self-employed workers pay income tax on their profit and Class 4 National Insurance, which can be lower than an employee’s Class 1 NI — but employees benefit from employer pension contributions, holiday pay, and sick pay that the self-employed must fund themselves.
What National Insurance do the self-employed pay?
The self-employed pay Class 4 National Insurance on profits above a threshold, and may pay Class 2 in some cases. Employees pay Class 1 NI, which is deducted automatically through PAYE.
Can the self-employed deduct expenses?
Yes. The self-employed can deduct allowable business expenses from their income before tax, which employees generally cannot. This is a major reason the two can end up with different take-home pay for the same headline income.
Is this a substitute for tax advice?
No. This is a simplified, high-level comparison. It omits VAT, detailed business deductions, dividends, and contractor-specific rules. For your exact position, consult an accountant or HMRC.