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Self-employed and sole trader tax calculator

Estimate your Self Assessment bill on sole trader profits — income tax, Class 4 National Insurance and student loan — and how much to set aside for payments on account.

Tax year 2026/27 Rules checked: November 2026 How we calculate

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Or use the £1,000 trading allowance if your expenses are lower.

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Where you pay tax
More options
Self Assessment bill£8,9522026/27
Profit after tax and NI
£38,048
Per month
£3,171
Each payment on account
£4,476Jan and Jul, towards next year
Where the money goes
  • Kept£38,04881%
  • Income tax£6,88615%
  • Class 4 NI£2,0664%
Turnover
£55,000.00
Expenses
−£8,000.00
Taxable profit
£47,000.00
Personal allowance
£12,570
Income tax on profits
−£6,886.00
Class 4 NI (6% / 2%)
−£2,065.80
Kept
£38,048.20
  • Class 2 NI is no longer compulsory: profits above £7,105 earn a National Insurance credit automatically.
  • Payments on account apply when your bill is over £1,000 and less than 80% of your tax was collected at source.

This is an estimate based on published rates, not tax or financial advice. Your payslip or assessment may differ. We are an independent site, not affiliated with any government agency.

How sole trader tax is calculated

  1. Profit = turnover − allowable expenses (or the £1,000 trading allowance if that is higher).
  2. Income tax on total income (profit plus any salary) above the personal allowance, at 20%, 40% and 45% — or Scottish rates if you live in Scotland. If you also have a job, PAYE has already taken the tax on your salary, so your Self Assessment bill is the extra tax caused by the profit.
  3. Class 4 NI: 6% of profit between £12,570 and £50,270, 2% above.
  4. Student loan: 9% of total income above the plan threshold, minus anything already deducted through payroll.
  5. Payments on account: if the bill is more than £1,000 and less than 80% of your tax was collected at source, HMRC asks for two advance payments towards next year, each half of this year’s bill.

Worked example: £47,000 profit

Turnover £55,000, expenses £8,000, no other income, England, 2026/27

Profit is £47,000. Income tax is 20% of £34,430 = £6,886.00, and Class 4 NI is 6% of the same amount: £2,065.80. Because the bill is over £1,000, each payment on account for next year is half of it, so the first January payment is 150% of this year’s bill.

Self Assessment bill£8,9522026/27
Profit after tax and NI
£38,048
Per month
£3,171
Each payment on account
£4,476Jan and Jul, towards next year
Turnover
£55,000.00
Expenses
−£8,000.00
Taxable profit
£47,000.00
Personal allowance
£12,570
Income tax on profits
−£6,886.00
Class 4 NI (6% / 2%)
−£2,065.80
Kept
£38,048.20

What changed for 2026/27

  • Class 2 voluntary rate rose to £3.65 a week; the small profits threshold to £7,105.
  • Making Tax Digital for Income Tax started on 6 April 2026 for qualifying income above £50,000 (turnover from self-employment and property combined, before expenses).
  • Basis period reform is complete: profits are taxed on a tax-year basis, so accounting periods that do not match the tax year are apportioned.

Tips

  • Put money aside each month: 25–30% of profit covers most basic-rate traders, including payments on account.
  • Claim every allowable expense, including a share of home costs, mileage at 45p a mile for the first 10,000 business miles, and capital allowances on equipment.
  • Reduce payments on account online if you expect profits to fall — but interest is charged if you reduce them too far.
  • Pension contributions reduce tax at your highest rate and can restore the personal allowance above £100,000.

Questions people ask

How much tax does a sole trader pay?

Income tax at the same rates as employees on profits above the personal allowance, plus Class 4 National Insurance at 6% on profits between £12,570 and £50,270 and 2% above.

Do I still pay Class 2 National Insurance?

Not compulsorily. Since April 2024, profits above the small profits threshold (£7,105 in 2026/27) give you a National Insurance credit automatically. Below it you can pay voluntary Class 2 at £3.65 a week to protect your State Pension.

When is the tax due?

The balancing payment for 2026/27 is due by 31 January 2028, along with the first payment on account for 2027/28. The second payment on account is due by 31 July 2028.

What is the trading allowance?

The first £1,000 of trading income is tax-free. If your expenses are below £1,000 you can deduct the allowance instead of actual expenses.

Does Making Tax Digital apply to me?

From April 2026, sole traders and landlords with qualifying income over £50,000 must keep digital records and send quarterly updates. The threshold falls to £30,000 from April 2027.

Official sources

Rules checked: November 2026.

This is an estimate based on published rates, not tax or financial advice. Your payslip or assessment may differ. We are an independent site, not affiliated with any government agency. Read the full disclaimer.