Self-Employed Tax Calculator

How self-employed tax works in the UK

As a sole trader you pay Income Tax on your profits (income minus allowable expenses) using the same Personal Allowance and rUK bands as an employee, plus Class 4 National Insurance — a separate NI charge specifically for the self-employed. There is no PAYE deducting tax as you earn, so you file a Self Assessment return and pay what you owe, usually by 31 January after the tax year ends.

This calculator adds up Income Tax and Class 4 NI on your profit, shows your take-home, and flags whether HMRC's payments on account system applies to you.

Income Tax on your profits (2026/27)

The first £12,570 of your profit is tax-free (your Personal Allowance), then 20% on the next £37,700, 40% on profits from £50,270 up to £125,140, and 45% above that. If your total income (including any other earnings) passes £100,000, your Personal Allowance is reduced by £1 for every £2 over that threshold, disappearing entirely at £125,140.

This tool assumes your profit is your only taxable income and uses rUK (England, Wales, Northern Ireland) bands — Scotland has its own Income Tax bands with more steps and a 48% top rate, which are not modelled here.

Class 4 National Insurance explained

Class 4 NI is charged at 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270, for 2026/27. Unlike Income Tax, there's no separate taper — it is a straightforward two-band structure on your profit, and it's paid through Self Assessment alongside your Income Tax bill.

Class 2 National Insurance: mostly abolished since 2024/25

Mandatory Class 2 contributions were effectively scrapped from the 2024/25 tax year. If your profits are £7,105 or more (2026/27's Small Profits Threshold), you get your National Insurance record credited automatically — protecting your State Pension and other benefits — without having to pay a penny of Class 2.

If your profits are below £7,105, you're not required to pay anything, but you can choose to pay voluntary Class 2 at £3.65 a week (£189.80 a year) to keep building qualifying years for your State Pension. This calculator lets you toggle that on if it applies to you.

Payments on account: paying next year's tax in advance

If your Self Assessment bill is £1,000 or more and less than 80% of your tax was already collected at source (rare for the self-employed, who have no PAYE), HMRC asks for two advance payments on account — each 50% of that year's total tax and Class 4 NI bill — due on 31 January (alongside your balancing payment for the previous year) and 31 July. These count toward next year's actual bill, with any shortfall or refund settled the following January.

This often catches first-year sole traders out: your first Self Assessment bill can be up to 150% of what you expect, because you're paying that year's tax plus the first payment on account for the next year. Budgeting for this in advance avoids a cash-flow shock.

Putting money aside as you go

Because there's no employer withholding tax for you, most advisers recommend setting aside 25-30% of your profit as you invoice, in a separate account, so the January bill (and July payment on account, if it applies) doesn't arrive as a surprise. The calculator's effective rate figure is a reasonable starting point for that set-aside percentage at your income level.