UK self-employed tax calculator
Work out what you keep as a sole trader in the 2026/27 tax year: Income Tax, Class 4 National Insurance and student loans on your profit, when HMRC wants the money, and how it compares with a job paying the same.
£191 a year less than an employee paid the same amount as your turnover, after your business costs. An employer would also pay £5,250 of employer National Insurance on that salary.
Step by step
| Turnover (sales or fees) in the tax year | £40,000 |
|---|---|
| Allowable business expenses | −£1,000 |
| Taxable profit | £39,000 |
| Personal Allowance | −£12,570 |
| Income Tax (UK rates) | £5,286 |
| Class 4 NI (6% from £12,570 to £50,270, 2% above) | £1,586 |
| Tax, NI and loans | £6,872 |
| Business expenses paid | −£1,000 |
| Take-home pay | £32,128 |
When you pay HMRC
| 31 January after the tax year: the full bill | £6,872 |
|---|---|
| … plus the first payment on account for the next year | £3,436 |
| First January payment in total | £10,308 |
| 31 July: second payment on account | £3,436 |
| Each later year: 31 January and 31 July, plus any balance | £3,436 + £3,436 |
Your bill is over £1,000, so HMRC asks for payments on account: half of this year's Income Tax and Class 4 NI towards next year, on 31 January and 31 July. Student loan and Class 2 are not included in them. Put about 17% of every invoice aside.
Self-employed vs employee, 2026/27
| Turnover | Tax and NI | Self-employed, take-home | Employee, take-home | Difference |
|---|---|---|---|---|
| £15,000 | £372 | £13,628 | £14,320 | −£691 |
| £20,000 | £1,672 | £17,328 | £17,920 | −£591 |
| £30,000 | £4,272 | £24,728 | £25,120 | −£391 |
| £40,000 | £6,872 | £32,128 | £32,320 | −£191 |
| £50,000 | £9,472 | £39,528 | £39,520 | +£9 |
| £60,000 | £13,469 | £45,531 | £45,357 | +£174 |
| £80,000 | £21,869 | £57,131 | £56,957 | +£174 |
| £100,000 | £30,269 | £68,731 | £68,557 | +£174 |
| £150,000 | £57,490 | £91,510 | £91,286 | +£224 |
England, Wales or Northern Ireland, £1,000 of costs (the trading allowance), no student loan or pension. The employee is paid the turnover as salary. Self-employed National Insurance is lower than an employee's 8%, but you have no employer pension, sick pay or holiday pay.
How sole traders are taxed
- Profit: turnover minus allowable business expenses, or minus the £1,000 trading allowance if that is more. Since 2024/25 profits are taxed for the tax year itself (6 April to 5 April), whatever your accounting date.
- Income Tax: the same Personal Allowance and bands as employees, including the Scottish bands if you live in Scotland.
- Class 4 National Insurance: 6% of profits between £12,570 and £50,270, and 2% above.
- Class 2 National Insurance: no longer charged. Profits of £7,105 or more count towards your State Pension automatically; below that you can pay £3.65 a week voluntarily.
- Student loans: collected through Self Assessment, at 9% of your income above your plan's yearly threshold, or 6% for a postgraduate loan.
When you pay
There is no PAYE, so you file a Self Assessment return and pay by 31 January after the tax year ends: for 2026/27, by 31 January 2028. If the bill is more than £1,000, HMRC also asks for two payments on account towards the next year. Your first January can therefore cover a year and a half of tax, so set money aside from the start.
Moving to the UK as a sole trader
- Register for Self Assessment as soon as you start trading, and by 5 October after the end of your first tax year at the latest.
- Check that your visa allows self-employment before you start; many work visas do not.
- Register for VAT if your taxable turnover goes over £90,000 in any 12 months.
- From 6 April 2026, Making Tax Digital applies once your turnover from self-employment and property is over £50,000.
Assumptions
- A sole trader resident in the UK for the whole 2026/27 tax year with no other income, no pension contributions and no losses brought forward.
- Payments on account are shown as if last year's bill was the same as this year's.
- VAT, the High Income Child Benefit Charge, Marriage Allowance and partnerships are not included.
Frequently asked questions
How much tax do self-employed people pay in the UK in 2026/27?
On £40,000 of turnover with £1,000 of costs, a sole trader in England pays £5,286 Income Tax and £1,586 Class 4 National Insurance, keeping £32,128 a year (£2,677 a month). An employee on £40,000 keeps £32,320.
Do self-employed people still pay Class 2 National Insurance?
No, not since 6 April 2024. With profits of £7,105 or more you get a qualifying year for the State Pension without paying it. Below that you can choose to pay £3.65 a week voluntarily to protect your State Pension.
What are payments on account?
Advance payments towards next year's bill: each is half of this year's Income Tax and Class 4 NI, due on 31 January and 31 July. They apply when your bill is more than £1,000, unless 80% or more of your tax was already taken at source. On £30,000 of turnover the first January can mean paying £6,408 at once.
What is the trading allowance?
A tax-free allowance of £1,000 a year for trading income. If your turnover is under £1,000 you do not need to tell HMRC; above it you can deduct the £1,000 instead of your actual expenses. This calculator uses whichever is higher.
Do I need Making Tax Digital?
From 6 April 2026, sole traders and landlords whose qualifying income (turnover from self-employment and property, before expenses) was over £50,000 in 2024/25 must keep digital records and send quarterly updates through compatible software. The limit falls to £30,000 from 6 April 2027 and £20,000 from 6 April 2028, each based on the return from two years earlier.
Sources: GOV.UK: Self-employed National Insurance rates, GOV.UK: Rates and allowances, National Insurance contributions, GOV.UK: Tax-free allowances on property and trading income, GOV.UK: Understand your Self Assessment tax bill (payments on account), GOV.UK: Check if you are eligible for Making Tax Digital for Income Tax, HMRC Business Income Manual BIM81201: tax year basis from 2024-25, GOV.UK: Repaying your student loan if you are self-employed. Contracting through an agency? Compare an umbrella company with a limited company in the UK contractor calculator. Employees: UK take-home pay calculator.