It’s one of the most common questions we get:

“How much should I be putting aside for tax?”

And it’s a good question, because getting this right makes everything else much easier.

Getting it wrong usually doesn’t feel like a problem at first…
until January arrives.

The aim isn’t to be perfectly accurate.

It’s simply to stay ahead.

If you’re self-employed or running a business, your tax doesn’t appear all at once.

It builds up gradually, based on the profit you’re making throughout the year.

The difficulty is that it doesn’t sit separately, it’s mixed in with the rest of your money.

So unless you’re actively setting some aside, it’s very easy to spend money that was never really yours to begin with.

You don’t need complex calculations to stay on track.

A rough percentage is usually enough.

🔹 Sole traders / self-employed

👉 Set aside 20%–30% of your profit

This generally covers:

• Income tax
• National Insurance

If your income increases, you may need to move towards the higher end of that range.

👉 Set aside 19%–25% of company profits

This covers:

• Corporation tax

Then separately, you’ll need to consider:

• personal tax on salary/dividends

This depends on how you’re structured, so it’s worth reviewing properly.

👉 This works slightly differently

Under CIS, tax is already deducted at:

• 20% (or 30% if not registered)

However, that doesn’t always mean everything is covered.

You may:

• still have additional tax to pay
• or be due a refund

Either way, accurate records are key, because your final position depends on your actual income and expenses.

There are a few common patterns:

“I’ll deal with it later”

This is the biggest one.

By the time “later” comes around, the tax bill has already built up.

“There’s money in the bank, so I must be fine”

Cash and profit aren’t the same.

Spending without factoring in tax is where problems start.

“I’ll just see what the bill is in January”

This usually leads to:

• stress
• cashflow pressure
• difficult decisions

You don’t need anything complicated.

A simple approach works well:

• Have a separate savings account
• Move a percentage across regularly (weekly or monthly)
• Adjust slightly as the year progresses if needed

That’s it.

It’s not about being exact, it’s about being prepared.

At the beginning of the tax year, everything is clean.

No backlog. No pressure.

Which makes it the easiest time to build the habit.

Even small, consistent amounts make a big difference over 12 months.

You don’t need to get the percentage exactly right.

You don’t need perfect forecasting.

You just need to avoid being in a position where the bill is a surprise.

Setting money aside for tax isn’t complicated, but it does require consistency.

The people who feel most in control aren’t doing anything particularly advanced.

They’ve just made it a routine part of how they manage their money.

At Llewellyns, we always say:

It’s far easier to set a bit aside throughout the year than to find it all at once at the end.