Updated to fiscal year 2026-27
UK Self-Employed / Sole Trader Tax Calculator
Enter your self-employment income and expenses to see the income tax, Class 4 and Class 2 National Insurance you'll owe on your trading profit, and what you keep.
- Take-home (81.3%)
- Income tax (14.4%)
- Class 4 NI (4.3%)
You keep about 81.3p in every pound of profit after income tax and Class 4 NI.
| Turnover | £50,000 |
|---|---|
| Less allowable expenses | −£5,000 |
| Taxable profit | £45,000 |
| Income tax | −£6,486 |
| Class 4 National Insurance | −£1,946 |
| Take-home profit | £36,568 |
| Voluntary Class 2 (State Pension top-up) | - |
Your allowable expenses are more than your turnover, so your taxable profit is £0. You cannot pay negative tax; losses can be carried against other years in the full planner.
We used the £1,000 trading allowance instead of your £5,000 of expenses, because it leaves a lower taxable profit.
Your profit is at or above the £7,105 small-profits threshold, so you earn a qualifying State Pension year with no Class 2 to pay.
Information
If you work for yourself as a sole trader, you pay tax on your profit, which is your self-employment income (turnover) minus your allowable business expenses. There is no employer deducting tax as you go: you report the profit on a Self Assessment tax return and pay income tax and National Insurance on it after the tax year ends.
What tax do you pay on the profit? Three things. Income tax, charged band by band against the HMRC bands after your personal allowance, with your profit stacked on top of any other income you have. Class 4 National Insurance, a percentage of your profit between the lower and upper profits limits, with a smaller rate above. And, in some cases, Class 2 National Insurance.
What is the £1,000 trading allowance? The first £1,000 of trading income is tax-free. If your allowable expenses are below £1,000, you can deduct the £1,000 allowance instead of your actual costs, whichever leaves the lower taxable profit. This calculator picks the better of the two for you. If your turnover is under £1,000, it is all covered by the allowance and there is no tax to pay.
Do you still pay Class 2 National Insurance? From the 2024 to 2025 tax year, Class 2 was reformed. If your profit is at or above the small-profits threshold you no longer pay the flat weekly charge, but you still earn a qualifying year toward your State Pension for free. If your profit is below the threshold, Class 2 is voluntary: you can choose to pay it to keep the year counting toward your pension. Tick the box to include it.
Does Scotland change the figures? Only the income tax. Since 2017 Scotland sets its own income-tax bands and rates, so ticking "Resident in Scotland" applies the Scottish bands to your profit. National Insurance (both Class 2 and Class 4) is the same across the whole UK.
What is not in this calculator? This page shows the tax and National Insurance on a single year's trading profit. It does not model payments on account, the tax-year basis change, VAT, capital allowances on equipment, losses carried across years, or having more than one trade; those interact across multiple years and are best simulated alongside the rest of your financial picture in the full simulator, which can import your figures as a starting scenario.
FAQ
- What tax does a sole trader pay?
Three things on your trading profit (turnover minus allowable expenses): income tax, Class 4 National Insurance, and, in some cases, Class 2 National Insurance. Income tax is charged on the profit stacked on top of any other income you have, so it can fall into higher bands than the profit alone would suggest. Class 4 NI is a percentage of the profit between the lower and upper profits limits. Payments on account, the tax-year basis and multiple trades are handled in the full simulator; the "Open full simulator" button below imports your figures as a starting scenario.
- What is the £1,000 trading allowance?
The first £1,000 of trading income is tax-free. If your allowable expenses are less than £1,000, you can deduct the £1,000 allowance instead of your actual costs, whichever leaves the lower taxable profit. This calculator picks the better of the two for you automatically, exactly as HMRC allows. If your turnover is under £1,000 you owe no tax on it at all.
- Do I still pay Class 2 National Insurance?
From the 2024 to 2025 tax year, Class 2 was reformed. If your profit is at or above the small-profits threshold you no longer pay the flat weekly charge, but you still earn a qualifying year toward your State Pension for free. If your profit is below the threshold, Class 2 becomes voluntary: you can choose to pay it (52 weeks at the weekly rate) to keep the year counting toward your pension. Tick the box above to include it.
- I'm employed and self-employed. Does this still work?
Yes. Put your salary (or pension) in the "other income" box. Your trading profit stacks on top of it for income tax, so the calculator taxes the profit in the bands it actually reaches. National Insurance is worked out separately: your employer already deducts Class 1 on the salary, and this page shows the Class 4 and Class 2 due on the self-employment profit.
Recent changes
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Class 4 National Insurance main rate cut from 9% to 6% across two Budgets (9% to 8% at the Autumn 2023 Statement, then 8% to 6% at the Spring 2024 Budget). Class 2 National Insurance reformed at the same time: the self-employed with profits above the small-profits threshold no longer pay the flat weekly charge but still earn a qualifying State Pension year automatically.
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The Class 4 lower profits limit was raised mid-year to £12,570, aligning the point where self-employed National Insurance starts with the income-tax personal allowance, so profit up to the personal allowance now carries no income tax and no Class 4 NI.
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The £1,000 trading allowance was introduced: the first £1,000 of trading income is tax-free, and where allowable expenses are below £1,000 a trader may deduct the flat allowance instead of actual costs.
Sources
Disclaimer
Not financial advice. Figures are computed from the legislative tables published by HMRC and do not account for personal circumstances such as marriage allowance, capital allowances, VAT, or income from more than one trade. Consult a qualified accountant or adviser for personal decisions.
