Spring Budget 2024: Self-Employed Musician Tax Calculator

In light of Hunt’s Spring Budget announcement yesterday, many of you may be wondering how this impacts you and your finances, particularly those of you who are self-employed. 

At Encore, 91% of our musicians are either self-employed, employed and self-employed or freelance and to help them get a better grasp of how this budget will impact them we’ve created this handy calculator below. 

The calculator asks you to enter your annual profits and then will calculate your National Insurance contributions and combined Tax and National Insurance before the 6th of April and 6th April 2024. 

National Insurance Contributions:

• Class 4 National Insurance (Before 6th April 2024):

• No contributions are made on the first £12,570 of profits.
• Profits between £12,570 and £50,270 are subject to a 9% contribution rate.
• Profits above £50,270 are subject to a 2% contribution rate.
• Class 4 National Insurance (After 6th April 2024):

• The same thresholds apply as before, but the rates change.
• Profits between £12,570 and £50,270 are subject to a 6% contribution rate (reduced from 9%).
• Profits above £50,270 continue to be subject to a 2% contribution rate.

The total National Insurance contributions before and after the specified date are calculated separately based on these rules.

Income Tax:

1. Personal Allowance: The calculator subtracts the standard personal allowance (£12,570 for the tax year 2023/24, this can change annually) from the annual profits to determine taxable income. If the annual profits are less than the personal allowance, the taxable income is zero.
2. Tax Bands: The taxable income is then allocated into different tax bands:

• Basic rate (20%) –  £12,571 to £50,270: Charged on taxable income up to a certain threshold.
• Higher rate (40%) – £50,271 to £125,140: Charged on taxable income above the basic rate threshold up to a higher threshold.
• Additional rate (45%) –  over £125,140: Charged on taxable income above the higher rate threshold.

The calculator sums up the tax from each band to determine the total income tax due (although this hasn’t changed in the budget).