How to use the self-employed tax calculator
- Enter your turnover for the 2026/27 tax year (6 April 2026 to 5 April 2027): everything the business took in, before costs.
- Enter your allowable expenses. The calculator compares them with the £1,000 trading allowance and uses whichever gives the lower profit, and says which it chose.
- Add any salary from a job. PAYE has already taxed it, so the calculator works out the tax on salary and profit together and takes off what PAYE took. That is how a profit can end up taxed at 40% even when it is small.
- Add personal pension contributions (the gross amount, including the 20% the provider claims back), your student loan plan, and whether this is your first year of payments on account.
The bill, take-home, payments on account and the monthly amount to save update as you type.
2026/27 rates for sole traders
| What | 2026/27 |
|---|---|
| Personal Allowance | £12,570, reduced by £1 for every £2 of adjusted net income over £100,000 (zero from £125,140) |
| Income tax | 20% basic, 40% higher from £50,271, 45% additional over £125,140 |
| Class 4 NI | 6% of profit from £12,570 to £50,270, 2% above |
| Class 2 NI | Nothing to pay. Treated as paid on profits of £7,105 or more; voluntary £3.65 a week below that |
| Trading allowance | £1,000 instead of expenses |
Class 2 stopped being a charge from April 2024. If your profits are under the small profits threshold, paying voluntary Class 2 keeps the year on your National Insurance record for the State Pension. Sources: gov.uk: Self-employed National Insurance rates and gov.uk: Income Tax rates and Personal Allowances.
Worked example: £45,000 turnover, £8,000 expenses, Plan 2 loan
A sole trader with £45,000 of sales and £8,000 of expenses has a profit of £37,000. Expenses beat the £1,000 trading allowance, so they are used. After the £12,570 Personal Allowance, £24,430 is taxed at 20%: income tax is £4,886. Class 4 NI is 6% of the same £24,430, which is £1,466. The Plan 2 loan takes 9% of the £7,615 above £29,385, or £685.
The total bill is £7,037, an effective rate of 19.02%, leaving £29,963 of take-home. Saving £586 a month covers it. Payments on account apply: each is £3,176, half of the £6,352 income tax and Class 4. In a first year, £10,213 is due on 31 January 2028 and £3,176 on 31 July 2028.
How payments on account work
When your Self Assessment bill is £1,000 or more, HMRC asks for advance payments towards next year's bill: two payments on account, each half of this year's income tax and Class 4, due by 31 January and 31 July. You do not have to make them if more than 80% of your tax was already taken at source, for example through the tax code on a salary. Student loan and capital gains are not included; they go into the balancing payment due on 31 January after the tax year ends (gov.uk: Payments on account).
The first year is the one that catches people out. With no payments on account made for 2026/27, the whole bill is due on 31 January 2028, together with the first payment on account for 2027/28. Choose "Already paying" if you made payments on account in January and July 2027; the calculator then assumes they were about the same as this year.
What the calculator leaves out
It uses the rates for England, Wales and Northern Ireland; Scottish taxpayers pay different income tax bands, though Class 4 is the same. It does not handle losses, partnership profits, savings or dividend income, the annual maximum that can limit Class 4 if you also pay Class 1 on a high salary, or the rule that you do not pay Class 4 if you were over State Pension age at the start of the tax year. The student loan line uses combined salary and profit, as gov.uk describes for Self Assessment, and takes off what PAYE already deducted.
Frequently asked questions
How much tax do I pay as a sole trader in 2026/27?
Income tax at 20%, 40% or 45% on profit above your £12,570 Personal Allowance, plus Class 4 National Insurance at 6% on profit between £12,570 and £50,270 and 2% above. On a £37,000 profit with no other income, that is £4,886 of income tax and £1,466 of Class 4, £6,352 in total.
Do I still pay Class 2 National Insurance?
No. Since April 2024 self-employed people do not have to pay Class 2. If your profits are £7,105 or more in 2026/27, Class 2 is treated as paid, so the year still counts for your State Pension. Below that you can choose to pay voluntary Class 2 at £3.65 a week to protect your record.
Should I use the trading allowance or claim expenses?
Use whichever is bigger. The trading allowance lets you deduct £1,000 (or your income, if lower) instead of your actual expenses; you cannot claim both. If your real costs are more than £1,000, claiming expenses gives a lower profit. The allowance cannot be used on income from your employer or a company or partnership you are connected to.
Do I have to make payments on account?
Yes, if your last Self Assessment bill was £1,000 or more, unless more than 80% of your tax was paid at source, such as through PAYE on a salary. Each payment is half of last year's income tax and Class 4, due by 31 January and 31 July. You can ask HMRC to reduce them if you expect your profit to fall.
I have a job and a side business. How is my profit taxed?
Your salary uses up your Personal Allowance and part of the basic rate band first, so your profit is taxed at whatever rate is left. On a £60,000 salary, a £20,000 profit is taxed at 40%: £8,000 of income tax plus £446 of Class 4. Class 4 is worked out on the profit alone.
How much should I save each month for my tax bill?
Divide your estimated bill by 12 and put that aside every month of the tax year. In your first year of payments on account, January also asks for half of next year in advance, so saving a little more than the monthly figure helps.