If you're self-employed in the UK, you'll eventually see two very different kinds of tool pitched at you: free tax calculators, and paid tax filing software like GoSimpleTax, FreeAgent or Xero. They get compared as if they're competitors. They're not — they do different jobs, and most people need both at different points.
What a free tax calculator actually does
A calculator like PayToolkit's Sole Trader Tax Calculator takes your income and expenses and estimates your Income Tax and National Insurance instantly, using current HMRC rates. No account, no ongoing data, no commitment. It answers one question: roughly what will I owe?
It does not file anything. It does not talk to HMRC. It does not store your figures between visits. It's a calculation, not a filing system.
What paid tax filing software actually does
Software like GoSimpleTax or FreeAgent goes further: it keeps records of your transactions through the year, categorises expenses, and prepares and submits your actual Self Assessment return to HMRC. Increasingly it also needs to support Making Tax Digital (MTD) requirements as HMRC rolls out digital record-keeping obligations. This is ongoing bookkeeping infrastructure, not a one-off estimate — and it's usually a paid subscription because of that.
Which one do you need?
| Free calculator | Paid tax software |
|---|
| Estimate what you'll owe before committing to anything | ✓ Yes | Usually requires signup first |
| Actually file your Self Assessment return | ✗ No | ✓ Yes |
| Keep records through the year for Making Tax Digital | ✗ No | ✓ Yes |
| Cost | Free | Typically a monthly or annual subscription |
| Signup required | No | Usually yes |
If you're at the "how much am I even going to owe" stage — deciding whether to register, budgeting for your bill, or just checking a number before a bigger decision — a free calculator is the right tool and there's no reason to pay for software yet. Once you're ready to actually file, or you're mandated into Making Tax Digital record-keeping, paid software (or an accountant) becomes the right next step.
Worked examples: what you'd actually owe
These use PayToolkit's own Sole Trader Tax Calculator methodology — 2026/27 Income Tax bands, Class 4 National Insurance at 6% (profits £12,570–£50,270) and 2% above that, and the optional Class 2 NI rate of £3.45/week shown on the calculator. Figures are illustrative; run your own numbers on the Sole Trader Tax Calculator for your exact situation.
Freelancer, £28,000 profit
| Income Tax | £3,086.00 |
| Class 4 NI | £925.80 |
| Class 2 NI (optional) | £179.40 |
| Total | £4,191.20 |
| Take-home | £23,808.80 |
Sole trader, £45,000 profit
| Income Tax | £6,486.00 |
| Class 4 NI | £1,945.80 |
| Class 2 NI (optional) | £179.40 |
| Total | £8,611.20 |
| Take-home | £36,388.80 |
Contractor, £65,000 profit
| Income Tax | £13,432.00 |
| Class 4 NI | £2,556.60 |
| Class 2 NI (optional) | £179.40 |
| Total | £16,168.00 |
| Take-home | £48,832.00 |
Why this matters before you pay for anything
Committing to a paid subscription before you know your rough tax picture means paying for infrastructure you might not need yet, or discovering too late that your income is high enough that proper bookkeeping software would have paid for itself. A free calculator costs nothing to check first.
Check your number first — it's free
See your Income Tax and National Insurance breakdown before deciding what else you need.
Open Sole Trader Tax Calculator
Frequently asked questions
Do I need tax software if I am self-employed?
Not necessarily, and not immediately. A free calculator is enough to understand what you owe. Paid filing software becomes useful once you need to file your Self Assessment return, keep digital records for Making Tax Digital, or want ongoing bookkeeping rather than a one-off estimate.
What is the difference between a tax calculator and tax software?
A calculator estimates your Income Tax and National Insurance from figures you enter, instantly, with no account or ongoing data. Tax filing software goes further: it stores your transactions over time, prepares and submits your actual Self Assessment return to HMRC, and generally requires a paid subscription.
Can I file my tax return using a free calculator?
No. A calculator like PayToolkit's Sole Trader Tax Calculator gives you an estimate to plan around, but it does not submit anything to HMRC. You still file your return yourself via HMRC's free online service, or through paid software, or via an accountant.
Methodology: Worked examples use PayToolkit's published Sole Trader Tax Calculator methodology for 2026/27 (Income Tax bands, Class 4 NI at 6%/2%, optional Class 2 NI at £3.45/week) and are illustrative only — run your own figures on the calculator for an estimate specific to you. This page compares tool categories generally; it does not review or rate any specific named software product.