Sole Trader Tax Calculator
Calculate your income tax, National Insurance, and take-home profit for 2026/27.
Profit
Taxable profit
£45,000.00
Income Tax
Personal allowance (0%)
£12,570.00 at 0%
Basic rate (20%)
£6,540.00
Higher rate (40%)
£0.00
Additional rate (45%)
£0.00
Total income tax
£6,540.00
Personal allowance
Basic 20%
Higher 40%
Additional 45%
National Insurance
Class 2 NI (£3.45/week)
£179.40
Class 4 NI (6%)
£1,948.80
Class 4 NI (2%)
£0.00
Total National Insurance
£2,128.20
Summary
Total tax + NI
£8,668.20
Take-home profit
£36,331.80
Effective tax rate
19.26%
Payments on Account
Each payment on account (50%)
£0.00
Due 31 Jan + 31 Jul following tax year
£0.00 total
2026/27 Tax Rates at a Glance
| Band |
Taxable Income |
Rate |
| Personal allowance | £0 - £12,570 | 0% |
| Basic rate | £12,571 - £50,270 | 20% |
| Higher rate | £50,271 - £125,140 | 40% |
| Additional rate | Over £125,140 | 45% |
National Insurance (Self-Employed)
| Class |
Applies to |
Rate |
| Class 2 | Profits over £12,570 | £3.45/wk |
| Class 4 (lower) | £12,570 - £50,270 | 6% |
| Class 4 (upper) | Above £50,270 | 2% |
How Sole Trader Tax Works in 2026/27
As a sole trader, you pay income tax and National Insurance on your business profits. Your taxable profit is your turnover minus allowable expenses. If you also have employment or pension income, all your income sources are combined before applying tax bands.
Calculating Your Taxable Profit
Taxable Profit = Annual Turnover - Allowable Expenses
Only expenses incurred wholly and exclusively for business purposes can be deducted. Common examples include stock and materials, travel, marketing, professional subscriptions, accountancy fees, and a proportion of phone and internet costs.
Personal Allowance Taper
Everyone gets a £12,570 personal allowance (tax-free amount). However, if your total income exceeds £100,000, your personal allowance reduces by £1 for every £2 above that threshold. At £125,140, the personal allowance is zero. This creates an effective 60% tax rate on income between £100,000 and £125,140.
National Insurance for Sole Traders
You pay two types of NI through your self-assessment return:
- Class 2: £3.45 per week (flat rate) if your profits exceed £12,570
- Class 4: 6% on profits between £12,570 and £50,270, plus 2% on profits above £50,270
Payments on Account
If your self-assessment tax bill is over £1,000 and less than 80% of your tax was deducted at source, HMRC will ask for payments on account. These are two advance payments (each 50% of your previous year's bill) due on 31 January and 31 July. In your first year of self-assessment, you may need to pay the full year's tax plus the first payment on account together on 31 January.
Sole Trader Tax FAQs
How much tax does a sole trader pay in the UK?
Sole traders pay income tax on their taxable profits using the same bands as employed workers: 0% on the first £12,570 (personal allowance), 20% on £12,571 to £50,270, 40% on £50,271 to £125,140, and 45% above £125,140. They also pay Class 2 NI (£3.45/week if profits exceed £12,570) and Class 4 NI (6% on profits between £12,570 and £50,270, plus 2% above £50,270).
What are allowable expenses for a sole trader?
Allowable expenses are costs you incur wholly and exclusively for your business. Common examples include office supplies, travel costs, stock and materials, marketing, professional subscriptions, accountancy fees, phone and internet (business proportion), and use-of-home allowance. You can only claim the business portion of any expense that has both personal and business use.
What is a payment on account for self-assessment?
Payments on account are advance payments towards your next year's tax bill. HMRC requires two payments on account (each 50% of your previous year's bill) due on 31 January and 31 July. They apply when your tax bill exceeds £1,000 and less than 80% of your tax was collected at source. Your first self-assessment year may require a larger upfront payment because you pay the current year's bill plus the first payment on account together.
Do sole traders pay National Insurance?
Yes. Sole traders pay two types of National Insurance: Class 2 NI at £3.45 per week (if profits exceed the small profits threshold of £12,570), and Class 4 NI at 6% on profits between £12,570 and £50,270, plus 2% on profits above £50,270. Both are calculated and paid through your self-assessment tax return.
Does other income affect my sole trader tax?
Yes. Your personal allowance and tax bands are shared across all income sources. If you have employment income of £30,000 and sole trader profits of £25,000, your combined income is £55,000. The personal allowance is used against your employment income first, so more of your sole trader profit falls into higher tax bands. The personal allowance also tapers by £1 for every £2 of income above £100,000.