Working out how much tax you need to pay can be messy business – especially if maths wasn’t your best subject at school.

Not only do you have to understand things like the Personal Allowance and which tax band you fall into, but you then need to know what order you should do all the calculations in, and how to do them.

Things can get even more complicated if you have different sources of income. For example, if you’re employed and have a side hustle (or two).

In this article we’ll explain how to calculate your take home pay on a 60k gross salary, whether you’re employed, self-employed, or somewhere in between.

What is 60k after tax if you’re employed?

Earning £60,000 as an employee means you’ll be taking home £45,357 a year after tax and National Insurance. Stay with us! We’ll explain where this figure comes from next.

Income tax

Firstly, earning £60,000 per year means you’re entitled to £12,570 tax-free. Called the Personal Allowance, this amount is deducted from your total earnings (£60k in this case) so your actual taxable income is £47,430. In short, you won’t pay tax on the first £12,570 of income.

The basic tax rate (20%) is then applied to your earnings between the £12,570 Personal Allowance and the threshold to start paying higher rate tax (which is £50,270). This works out as £9,486 of income tax.

The last bit of your income, between the £50,270 higher rate threshold and your total earnings of £60,000, falls into the higher rate tax band so this is taxed at 40% (£3,892). The total amount of income tax you’ll pay is £11,432.

Hang on – we’re not done yet. There’s also National Insurance to consider.

National Insurance

The NI thresholds for employees are currently the same as they are for income tax, but the rates are different.

• You won’t pay any NI on the first £12,570 of your income
• You’ll pay Class 1 NI at a rate of 8% on the part of your income between £12,570 and £50,270 (which is £3,016 of National Insurance)
• You’ll pay Class 1 NI at 2% on any earnings above the Upper Earnings Limit, so this bit will be £194.60
• Your total bill for National Insurance will be £3,210.60

The total amount of tax and NI you have to pay is £11,432 + £3,210.60, which comes to £14,642.60.

Subtract this number from your gross salary to work out your take-home pay: £60,000 – £14,642.60 = £45,357.40.

If you’re self-employed

Income tax is the same whether you’re self-employed or employed, but there are different rates involved when it comes to National Insurance.

National Insurance

The key thing to be aware of is that sole traders are required to pay Class 4 National Insurance if their profits are more than £12,570 per year. Rather than paying 8% like an employee does, you’ll pay 6%.

Again, you won’t pay any NI on the first £12,570 of your self-employed income. For the 2025 to 2026 tax year, you’ll pay 6% on income between £12,570 up to £50,270, and 2% on profits over £50,270.

Let’s say you had £60,000 in self-employed income.

• You’d pay nothing on the first £12,570
• Then 6% on any profits between £12,570 and £50,270. £50,270 – £12,570 = £37,700, and 6% of this is £2,262
• You’d then be left with £9,730 above the £50,270 threshold, and 2% of this comes to £194.60
• Your total bill for National Insurance would be £2,456.60

The amount of income tax would be the same as if you’re employed, and so the total amount of tax and NI you’d have to pay would be £11,432 + £2,456.60, which equals £13,888.60.

Take this away from your gross earnings, and you end up with £46,111.40 to take home.

Reporting through Self Assessment

As a sole trader you don’t have an employer to report your income for you, so you need to submit Self Assessment tax returns to tell HMRC about your earnings. You’ll also be able to claim either the expenses you’re entitled to, or the £1,000 trading allowance, so this will reduce your tax bill even more!

If you’re unsure about any of this, an accountant can help guide you through the process and ensure you’re being as tax-efficient as possible.

 
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