How do you budget on an irregular self-employed income?

Start with your essential monthly costs: housing, bills, food, debt repayments and childcare. Then look back over the last year of business income after expenses and tax. Lean months tell you more than the average does.

If your essential costs are higher than what a lean month covers, the gap has to come from savings, from cutting costs or from earning more in the good months. The budget planner helps you see your essential costs in one place.

Look at timing as well as amounts. Many quiet months are really late-payment months: the work was done, but the invoice has not been paid. Tracking when money actually lands, rather than when you invoiced, gives a truer picture. Cash basis accounting, the default for sole traders, records income in the same way.

Seasonal businesses can usually predict their lean spells. If December or August is always slow, put money aside in the months before it, so the dip is planned rather than a surprise.

A fixed transfer from the business account on the same date each month turns an uneven income into something you can budget around. In strong months the surplus stays in the business. In quiet months the business account covers the same transfer.

It also makes it obvious when things are going wrong. If the business account keeps falling despite a steady transfer, the amount is too high or the business needs to earn more. As a sole trader these transfers are drawings, so they do not change your tax. Tax is charged on profit.

It depends on your profit and where you live. Using 2026/27 rates outside Scotland:

• Profit up to £12,570: no Income Tax or Class 4 National Insurance.
• Each pound of profit from £12,570 to £50,270: 20% Income Tax plus 6% Class 4, so 26p.
• Each pound from £50,270 to £100,000: 40% plus 2%, so 42p.

A flat 25% to 30% of all income can be too much at low profits and too little once profits pass £50,270. Scottish Income Tax has six bands, including 21% from £29,527 and 42% from £43,663, so the figures there differ.

Keep the money in a separate savings account and leave it alone until the bill is due. The first year payments on account apply, the January bill can be about one and a half times a normal year's tax.

If you expect this year's profit to be lower than last year's, you can ask HMRC to reduce your payments on account online or on form SA303. That keeps money in the business when you need it. Be realistic: if the final bill is higher than the reduced payments, HMRC charges interest on the difference.

Quarterly figures help here. If you send quarterly updates under Making Tax Digital, or simply review your books every three months, you will spot a weak year early enough to act.

Relying on one or two clients makes income swing harder. A retainer or a mix of client types can smooth it out, though that depends on your line of work.

There is no official figure. It depends on how long your quiet spells usually last, how quickly clients pay and whether anyone else in your household has a steady income.

Work out how many months of essential costs you would want covered if work stopped, and build towards that in good months. The emergency fund calculator turns your monthly costs into a target. Keep the buffer apart from the tax account, so a quiet spell never eats into money HMRC is owed.

GOV.UK says you must be classed as an employee to get Statutory Sick Pay, so there is none when you work for yourself. Universal Credit or Employment and Support Allowance may help, depending on your circumstances.

Income protection insurance pays a monthly income if illness or injury stops you working, after a waiting period you choose. A longer waiting period lowers the cost, and your buffer can cover the gap until payments start.

Critical illness cover works differently. It pays a lump sum on diagnosis of one of a list of serious conditions, whether or not you can still work. Some people have both, and an adviser can help you weigh them against what you can afford.

It is also worth asking what happens to the business while you are off. A colleague who can take over urgent work, or clients who know who to contact, can keep some income coming in.