Self-Employed Tax Calculator

Sole traders pay income tax on profits plus Class 4 NI at 6% between £12,570 and £50,270 and 2% above. Class 2 is voluntary.

Updated 2026-10-03 · 2026/27 HMRC rates

Tax and NI on your profits£7,132You keep £32,868 · set aside 18% of profit

Income tax	£5,486
Class 4 NI (6% / 2%)	£1,646
Monthly set-aside	£594.32
Payments on account likely?	Yes — 31 Jan and 31 Jul

Kept £32,868 82.2%
Income tax £5,486 13.7%
Class 4 NI £1,646 4.1%

Your result is ready

Key facts

The personal allowance stays at £12,570 in 2026/27 and is reduced by £1 for every £2 of adjusted net income over £100,000, so it is gone entirely at £125,140 (HMRC income tax rates and allowances).
In England, Wales and Northern Ireland, 2026/27 income tax is 20% on the first £37,700 of taxable income, 40% up to £125,140 and 45% above that (HMRC rates and thresholds for employers 2026 to 2027).
Scotland has six bands in 2026/27: 19% starter on the first £3,967 of taxable income, 20% basic to £16,956, 21% intermediate to £31,092, 42% higher to £62,430, 45% advanced to £125,140 and 48% top above that (HMRC rates and thresholds for employers 2026 to 2027).
Budget 2025 extended the freeze on income tax thresholds and the equivalent employee and self-employed National Insurance thresholds for a further three years, from April 2028 to April 2031 (HM Treasury Budget 2025).
Employees pay Class 1 National Insurance at 8% on earnings between £12,570 and £50,270 a year and 2% above that in 2026/27 (HMRC rates and thresholds for employers 2026 to 2027).
Employers pay 15% National Insurance on earnings above the £5,000 secondary threshold, and eligible employers can claim an Employment Allowance of £10,500 (HMRC rates and thresholds for employers 2026 to 2027).
Self-employed people pay Class 4 National Insurance at 6% on profits between £12,570 and £50,270 and 2% above that; voluntary Class 2 costs £3.65 a week if profits are below £7,105 (GOV.UK self-employed National Insurance rates).
Dividend tax rose by 2 percentage points from April 2026: the basic rate is now 10.75% and the higher rate 35.75%, while the additional rate stays at 39.35% and the dividend allowance stays at £500 (GOV.UK tax on dividends).

How sole trader tax is worked out

Self-employed people pay income tax and Class 4 National Insurance on profit – turnover minus allowable expenses – not on what they take out of the business. Profit is added to any other income, the £12,570 Personal Allowance is applied once across everything, and Class 4 is charged at 6% on profit between £12,570 and £50,270 and 2% above.

Class 2 NI is no longer compulsory. If profits are £7,105 or more, Class 2 is treated as paid, so the year still counts for your State Pension. Below that you can choose to pay voluntary Class 2 at £3.65 a week to protect your record.

Worked examples for 2026/27

A sole trader in England with £30,000 profit and no other income pays £3,486 income tax and £1,046 Class 4 NI, keeping £25,468. The same profit in Scotland gives £3,451 of income tax because of the Scottish bands, while Class 4 is identical across the UK.

At £60,000 profit the bill rises to £11,432 income tax plus £2,457 Class 4, a total of £13,889. Everything above £50,270 is taxed at 40% plus 2% NI, so each extra £1,000 of profit leaves about £580 after tax.

Profit (England)	Income tax	Class 4 NI	Total	Kept
£20,000	£1,486	£446	£1,932	£18,068
£30,000	£3,486	£1,046	£4,532	£25,468
£45,000	£6,486	£1,946	£8,432	£36,568
£60,000	£11,432	£2,457	£13,889	£46,111
£90,000	£23,432	£3,057	£26,489	£63,511

Expenses that reduce your profit

Allowable expenses must be incurred wholly and exclusively for the business. Typical claims are stock and materials, software and subscriptions, phone and broadband business use, professional insurance, accountancy fees, advertising and the business share of travel.

Instead of actual vehicle costs you can use simplified mileage: for 2026/27 that is 55p a mile for the first 10,000 business miles in a car or van and 25p after, or 24p for motorcycles. 12,000 business miles in a car would give a deduction of £6,000. You cannot switch to mileage for a vehicle on which you have already claimed capital allowances.

Working from home can be claimed at flat monthly rates if you work at least 25 hours a month at home: £10 for 25–50 hours, £18 for 51–100 hours and £26 for 101 hours or more. Alternatively, apportion actual household costs by room and time used.

If your expenses are small, the £1,000 trading allowance can be deducted instead of actual costs. You choose one or the other, not both.

Deadlines, payments on account and record keeping

Tell HMRC by 5 October after the end of the tax year in which you started trading. Paper returns are due by 31 October and online returns by 31 January, which is also when the tax is due.

Payments on account apply unless last year’s bill was under £1,000 or more than 80% of your tax was collected at source. Each payment is half of the previous year’s bill, due on 31 January and 31 July, with a balancing payment the following January. In your second year this can mean paying 150% of a year’s bill in one January. If profits are falling you can ask HMRC to reduce them, online or with form SA303, but you will pay interest if you cut them too far.

Since April 2024 the cash basis is the default for most sole traders: you record income when it is received and expenses when they are paid. You can opt for traditional accounting if, for example, a lender wants accrual accounts.

Making Tax Digital for Income Tax

Making Tax Digital (MTD) for Income Tax requires quarterly updates through compatible software. It is based on qualifying income, which is gross self-employment and property income before expenses, not profit.

From April 2026: qualifying income over £50,000 in the 2024/25 tax return.
From April 2027: qualifying income over £30,000 in 2025/26.
From April 2028: qualifying income over £20,000 in 2026/27.

Frequently asked questions

How much should I put aside for tax when self-employed?

A common rule of thumb is 20%–30% of profit. Use the calculator for your exact figure, and remember payments on account if your bill is over £1,000.

Do I pay tax on money I leave in the business?

Yes. As a sole trader you are taxed on all the profit for the year whether you withdraw it or not. Drawings are not an expense.

When do I need to register as self-employed?

By 5 October after the end of the tax year in which you started. If your gross trading income is £1,000 or less you may not need to register at all.

Does Class 4 NI count towards my State Pension?

Class 4 itself does not build entitlement, but profits of £7,105 or more mean Class 2 is treated as paid, which gives you a qualifying year.

Can I claim the 55p mileage rate in 2026/27?

Yes. For 2026/27 the simplified rate is 55p a mile for the first 10,000 business miles in a car or goods vehicle and 25p after that. Before 6 April 2026 it was 45p.

Sources

Figures are taken from official government publications and were last reviewed on 2026-10-03.