Estimate the Income Tax and National Insurance you will pay as a sole trader on your profit for the 2026/27 tax year. With £45,000 of sales and £5,000 of expenses, a £40,000 profit costs £5,486 in Income Tax and £1,645.80 in Class 4 National Insurance, £7,131.80 in total. That leaves £32,868.20, or about £2,739 a month. If this is your first Self Assessment year, you would pay £10,697.70 by 31 January 2028, including the first payment on account for the following year.
Self-Employed Tax Calculator 2026/27
Income Tax, Class 4 NI and payments on account for sole traders · Updated 13 October 2026
- Taxable profit
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- Income Tax on the profit
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- Class 4 National Insurance
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- Class 2 National Insurance
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- Profit left after tax and NI
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- Per month
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- Share of profit paid in tax and NI
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- Each payment on account
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- Due 31 Jan 2028 if this is your first return
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Uses 2026/27 rates and the standard Personal Allowance. Student loan repayments, pension contributions and other reliefs are not included. Payments on account assume your 2026/27 bill is used for 2027/28.
How sole traders are taxed in 2026/27
Your taxable profit is your turnover minus allowable expenses. Income Tax is charged on your total income, so any salary or pension uses up your Personal Allowance and basic rate band first. Class 4 National Insurance is worked out on your self-employed profit alone.
| Tax | Profit or income band | Rate |
|---|---|---|
| Income Tax: Personal Allowance | Up to £12,570 | 0% |
| Income Tax: basic rate | £12,571 to £50,270 | 20% |
| Income Tax: higher rate | £50,271 to £125,140 | 40% |
| Income Tax: additional rate | Over £125,140 | 45% |
| Class 4 NI: main rate | Profits £12,570 to £50,270 | 6% |
| Class 4 NI: upper rate | Profits over £50,270 | 2% |
| Class 2 NI | Profits of £7,105 or more | Nothing to pay; NI credit given |
| Voluntary Class 2 NI | Profits under £7,105 | £3.65 a week (optional) |
The Personal Allowance falls by £1 for every £2 of income over £100,000 and is gone at £125,140. Scottish taxpayers can choose Scotland in the calculator to use the 2026/27 Scottish bands.
Expenses or the £1,000 trading allowance
- Allowable expenses are costs you have wholly and exclusively for the business: stock and materials, business travel, the business share of phone and internet bills, insurance, advertising, bank charges and accountancy fees.
- Instead of claiming expenses you can deduct the £1,000 trading allowance. It suits people with very low costs. You cannot claim both.
- If your total self-employed income is £1,000 or less, it is tax-free and you do not need to register for Self Assessment for it.
- Equipment you buy for the business, such as a laptop, tools or a van, can usually be claimed too, either as an expense or through capital allowances.
Payments on account and deadlines
Self Assessment tax for 2026/27, including Class 4 NI, is due by 31 January 2028. Most sole traders also make two payments on account towards the next year’s bill, each half of the previous year’s tax, due on 31 January and 31 July. You do not have to make them if your last bill was under £1,000 or if more than 80% of your tax was collected at source, for example through PAYE on a job.
- First year example: profit £22,000 (sales £25,000, expenses £3,000) gives a bill of £2,451.80. On 31 January 2028 you pay that plus a first payment on account of £1,225.90, so £3,677.70. A second payment of £1,225.90 follows on 31 July 2028.
- If your income falls, you can ask HMRC to reduce your payments on account. If you reduce them too far, you pay interest on the difference.
Worked examples for 2026/27
| Situation | Profit | Income Tax | Class 4 NI | Total |
|---|---|---|---|---|
| Sales £25,000, expenses £3,000 | £22,000 | £1,886 | £565.80 | £2,451.80 |
| Sales £45,000, expenses £5,000 | £40,000 | £5,486 | £1,645.80 | £7,131.80 |
| Same, Scottish taxpayer | £40,000 | £5,551.07 | £1,645.80 | £7,196.87 |
| Sales £80,000, expenses £10,000 | £70,000 | £15,432 | £2,656.60 | £18,088.60 |
| Side business £10,000, expenses £2,000, plus a £35,000 job | £8,000 | £1,600 | £0 | £1,600 |
| Profit £120,000 (Personal Allowance mostly lost) | £120,000 | £39,432 | £3,656.60 | £43,088.60 |
In the side-business example the salary has already used the Personal Allowance, so every pound of the £8,000 profit is taxed at 20%. No Class 4 NI is due because the profit is under £12,570.
Making Tax Digital, VAT and other rules
- Making Tax Digital for Income Tax started on 6 April 2026 for sole traders and landlords whose combined self-employment and property income (before expenses) was over £50,000 in 2024/25. It extends to income over £30,000 from April 2027 and over £20,000 from April 2028. You keep digital records and send quarterly updates using compatible software.
- You must register for VAT if your taxable turnover goes over £90,000 in any rolling 12-month period.
- Student loan repayments on self-employed income are collected through Self Assessment along with your tax.
- If you start trading, register for Self Assessment by 5 October after the end of the tax year in which you started.
FAQs
Do I still have to pay Class 2 National Insurance?
No. If your profits are £7,105 or more, Class 2 contributions are treated as paid, so you get the National Insurance credit for your State Pension without paying anything. If your profits are lower, you can choose to pay voluntary Class 2 at £3.65 a week.
How much should I set aside for tax?
Use the share of profit shown by the calculator. On a £40,000 profit it is about 18%, but in your first year you need roughly one and a half times the bill by 31 January because of the first payment on account. Putting money aside each month in a separate savings account makes this much easier.
I have a job as well. How is that handled?
Your employer deducts tax from your salary through PAYE. Your self-employed profit is added on top, so it is taxed at your highest rate. The calculator does this when you enter your salary as other income. Class 4 NI is still based only on the self-employed profit.
Related calculators
- VAT CalculatorAdd or remove VAT at 20%
- Take-Home Pay Calculator 2026/27Tax and NI on a salary
- Student Loan Repayment CalculatorPlan 1, 2, 4, 5 and postgraduate
Sources
- GOV.UK: Self-employed National Insurance rates
- GOV.UK: Income Tax rates and Personal Allowances
- GOV.UK: Payments on account
- GOV.UK: Sign up for Making Tax Digital for Income Tax
- GOV.UK: Find out if and when you need to use Making Tax Digital for Income Tax
- GOV.UK: Register for VAT
- Scottish Government: Scottish Income Tax 2026 to 2027
Figures current as of 13 October 2026
Each formula is checked against a separate test sheet with at least three worked examples. Results are estimates based on the numbers you enter and the published rules; your actual figures may differ. This is general information, not financial or tax advice.
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