What is the first step to calculate payments on account for the self-employed?

To calculate payments on account for the self-employed, the first step is to estimate the total income. This initial estimate is crucial because it provides a baseline for determining the amount of tax owed for the year. The total income will influence the calculation of both income tax and National Insurance contributions.

Once the total income is established, it can be used as the starting point from which other adjustments, such as deducting expenses or calculating National Insurance contributions, can be made. Having a clear estimate of total income helps ensure that subsequent calculations are accurate, and enables individuals to plan their tax payments appropriately. Thus, beginning with an estimation of total income lays a solid foundation for the overall tax assessment process.