Sole Trader Tax Calculator 2026/27
Work out your UK sole-trader (self-employed) tax for the 2026/27 tax year (6 April 2026 – 5 April 2027) from your annual profit. The calculator applies the personal allowance, Income Tax bands and Class 4 National Insurance, then shows your total tax and net profit after tax. Free, instant, England/Wales/NI rates.
Your sole-trader tax
- Net profit after tax£46,111.40
- Total tax + NIC£13,888.60
- Personal allowance£12,570.00
- Taxable income£47,430.00
- Income Tax£11,432.00
- — Basic rate (20%)£7,540.00
- — Higher rate (40%)£3,892.00
- Class 4 NIC£2,456.60
- — Main rate (6%)£2,262.00
- — Additional rate (2%)£194.60
- Class 2 NIC£0.00
- Effective tax rate23.15%
How it's calculated
A sole trader is taxed personally on the profit of their business — turnover less allowable expenses — and settles the bill once a year through Self Assessment, not through PAYE. There are two main charges on that single profit figure. The first is Income Tax. Everyone gets a tax-free personal allowance of £12,570; profit above that is taxed in slices — 20% on the first £37,700 of taxable profit (the basic-rate band), 40% on the next slice up to a taxable £112,570, and 45% on anything beyond. Once profit passes £100,000 the personal allowance is withdrawn by £1 for every £2 over the threshold and is gone by £125,140, producing an effective 60% rate across that narrow band. The second charge is Class 4 National Insurance, levied directly on profit: 6% on profit between £12,570 and £50,270, then 2% on the excess. Class 2 NIC, once a flat weekly stamp, is no longer a compulsory charge from 2024/25 — if your profit reaches the £7,105 Small Profits Threshold your contribution record is credited free, so the calculator shows it as £0. Income Tax bands shown here are the England, Wales and Northern Ireland ones; National Insurance is UK-wide and identical everywhere.
Net profit after tax = Profit − Income Tax − Class 4 NIC − Class 2 NIC
Taxable income = max(0, Profit − Personal Allowance)
Income Tax = 20% × (up to £37,700) + 40% × (£37,701…£112,570) + 45% × (above £112,570)
Class 4 NIC = 6% × (£12,570…£50,270) + 2% × (profit above £50,270)
Class 2 NIC = £0 (credited free at or above the £7,105 threshold)Worked example
Take a sole trader living in England with an annual profit of £60,000 for 2026/27, the full personal allowance and no other income:
| Annual profit | £60,000.00 |
| Less personal allowanceno taper: profit is below £100,000 | −£12,570.00 |
| Taxable income | £47,430.00 |
| Income Tax — basic rate @ 20%20% × £37,700 | −£7,540.00 |
| Income Tax — higher rate @ 40%40% × £9,730 | −£3,892.00 |
| Class 4 NIC — main rate @ 6%6% × £37,700 | −£2,262.00 |
| Class 4 NIC — additional rate @ 2%2% × £9,730 | −£194.60 |
| Class 2 NICcredited free above £7,105 | −£0.00 |
| Total tax and NIC | −£13,888.60 |
| Net profit after tax | £46,111.40 |
The effective rate is £13,888.60 ÷ £60,000 = 23.15%, even though part of this profit is taxed at 40%, because the first £12,570 is tax-free and the basic-rate band is taxed at just 20% plus 6% NIC. The marginal rate on the next pound of profit is 42% (40% Income Tax + 2% Class 4 NIC), since this trader is already above the £50,270 higher-rate threshold.
When your result may differ
Your real Self Assessment bill can move away from this estimate. Scottish taxpayers use six Income Tax bands (19%, 20%, 21%, 42%, 45% and 48%) rather than three, so their Income Tax differs — though Class 4 NIC is UK-wide and unchanged. Payments on account mean HMRC usually asks for the coming year's tax in two instalments (31 January and 31 July), each 50% of the prior year's bill, so your cash outgoing in a given January can be larger than the figure here. Other income — employment, dividends, savings interest or rental profit — stacks on top of self-employment profit and can push you into a higher band or trigger the £100,000 allowance taper. Pension contributions and Gift Aid extend your basic-rate band and cut the bill. Trading losses, capital allowances on equipment and the £1,000 trading allowance also change taxable profit. This tool assumes a single source of self-employment profit with the standard allowance and no payments on account.
Rates and thresholds
England, Wales and Northern Ireland — 2026/27 tax year. Class 4 National Insurance is UK-wide.
| Band | Profit range | Income Tax rate | Class 4 NIC rate |
|---|---|---|---|
| Personal allowance | £0 – £12,570 | 0% | 0% |
| Basic rate | £12,571 – £50,270 | 20% | 6% |
| Higher rate | £50,271 – £125,140 | 40% | 2% |
| Additional rate | Over £125,140 | 45% | 2% |
| Allowance taper | £100,000 – £125,140 | 60% effective | 2% |
Sources & legal basis
| Source | What it covers | Last checked |
|---|---|---|
| HMRC — Self-employed National Insurance rates | Class 4 rates and limits and the Class 2 weekly rate | |
| HMRC — Income Tax rates and Personal Allowances | Income Tax bands, rates and the £100,000 allowance taper | |
| HMRC — Set up as a sole trader (Self Assessment) | How sole traders register and pay tax on profit | |
| gov.uk — Income Tax in Scotland | Scottish band differences |
Update log
- — Updated to the 2026/27 tax year; confirmed Class 4 at 6%/2% and the £7,105 Small Profits Threshold for free Class 2 credit.
- — Added worked example, rates table and source table; expanded the explanation of Class 2, payments on account and the £100k allowance taper.
Frequently asked questions
Is sole-trader tax worked out on turnover or on profit?
On profit. Your profit is your turnover (total sales) minus allowable business expenses, and Income Tax and Class 4 National Insurance are both charged on that profit figure — not on your turnover. Enter your profit, not your sales. For example, on a £60,000 profit the personal allowance is £12,570, taxable income is £47,430, Income Tax is £11,432.00 and Class 4 NIC is £2,456.60, giving £13,888.60 of total tax and £46,111.40 net.
How much Income Tax does a sole trader pay in 2026/27?
After the £12,570 personal allowance, you pay 20% basic rate on taxable income up to £37,700 (profit up to £50,270), 40% higher rate up to a taxable £112,570 (profit up to £125,140) and 45% additional rate above that. On a £60,000 profit the £47,430 of taxable income breaks down as £37,700 at 20% (£7,540.00) and £9,730 at 40% (£3,892.00), so Income Tax is £11,432.00.
How does Class 4 National Insurance work for the self-employed?
Class 4 NIC is charged on your profit: 6% (the main rate) on profits between £12,570 and £50,270, then 2% on anything above £50,270. On a £60,000 profit that is £37,700 × 6% = £2,262.00 plus £9,730 × 2% = £194.60, a total Class 4 NIC of £2,456.60. There is no Class 4 NIC on profit below £12,570.
Do I still have to pay Class 2 National Insurance?
Not as a mandatory flat charge. From 2024/25 onward Class 2 NIC is no longer required: if your profit is at or above the £7,105 Small Profits Threshold you are treated as having paid it at no cost, so your State Pension and benefit entitlement is protected for free. If your profit is below that threshold you can choose to pay Class 2 voluntarily at £3.65 a week to keep your record going. That is why this calculator shows Class 2 as £0.00.
Does this calculator cover Scotland?
The Income Tax figures use England, Wales and Northern Ireland bands. Scottish taxpayers have a different, six-band Income Tax system (starter 19%, basic 20%, intermediate 21%, higher 42%, advanced 45%, top 48%), so their Income Tax will differ. National Insurance is reserved to the UK and is identical, so the Class 4 NIC figure is the same wherever you live. Select Scotland to see a warning note — the bands shown remain the England/Wales/NI ones.
Why is the personal allowance lower at high profits?
Once your profit goes above £100,000 the personal allowance is tapered away by £1 for every £2 of profit over that threshold, and it disappears completely at £125,140. Losing the allowance while still paying 40% creates an effective 60% marginal rate on the slice of profit between £100,000 and £125,140. Above £125,140 there is no personal allowance and the 45% additional rate applies.