Economy Talk

Self-employed people: how do you set aside money for tax?

I'm an accountant in Leeds and every January I see the same thing: freelancers who had a great year and then get a tax bill they didn't save for.

The simple method I suggest is a separate account and moving a fixed percentage of every payment into it the day it arrives. Not at the end of the month. The day it arrives. Something like 25–30% for basic-rate folk in the UK is a common rough guide, but it depends on your situation.

But I'm curious what actually works for real people, not what accountants tell them. What's your system? And what does it look like in other countries?