How much tax does a UK sole trader pay in 2026/27?

You pay Income Tax on profit above the £12,570 Personal Allowance — 20% to £50,270, 40% to £125,140, then 45% — plus Class 4 National Insurance at 6% on profit between £12,570 and £50,270, then 2% above. Class 2 NI is no longer required if your profit is above the £6,725 Small Profits Threshold.

Why is my first Self Assessment bill so big?

If your tax and Class 4 NI come to more than £1,000, HMRC adds Payments on Account: two advance payments of 50% each towards next year's bill. So your first 31 January payment is about 150% of the year's tax, with another 50% due 31 July.

How much should I set aside for tax as a sole trader?

A safe rule is to move your effective tax rate — often around 20% to 28% of everything you are paid — into a separate savings pot, so the January bill holds no surprises.

Do sole traders still pay Class 2 National Insurance?

No. Since April 2024, Class 2 NI is not required if your profit is above the £6,725 Small Profits Threshold, and you still build your State Pension record for free. Below that you can pay it voluntarily.

How much tax will I pay? (2026/27)

Enter your self-employment income and expenses to estimate your Income Tax, Class 4 National Insurance, take-home pay, and your first-year Payments on Account. Free, no sign-up.

Estimate only. Assumes self-employment is your only income and you use England, Wales or NI tax rates (Scotland has different Income Tax bands). It doesn't include student loans, the High Income Child Benefit Charge, or other income. Not tax advice.

Income / turnover (£ a year)

Total money your business took in, before expenses.

Business expenses (£ a year)

Allowable costs. Leave as 0 to enter profit directly above.

Estimated Income Tax + National Insurance

Taxable profit (after expenses)

Personal Allowance

Income Tax

Class 4 National Insurance

Class 2 National Insurance

Total tax & NI

Take-home after tax

Effective tax rate

Your first Self Assessment bill could be bigger

Due 31 January (this year's tax + 1st payment on account)

Due 31 July (2nd payment on account)

Because your bill is over £1,000, HMRC asks for two advance "Payments on Account" towards next year — 50% each. They're not extra tax; they're credited against next year. First-timers are often caught out by this in January.

Rates from gov.uk for 2026/27: Personal Allowance £12,570 (tapered above £100,000), Income Tax 20% / 40% / 45%, Class 4 NIC 6% (£12,570–£50,270) then 2%. Class 2 NIC is no longer required for profits above the £6,725 Small Profits Threshold.

Every expense you log here cuts the bill above

The fastest way to a smaller tax bill is claiming every allowable expense. PocketReceipt scans receipts, captures VAT, logs mileage and sorts everything into HMRC categories — so nothing gets missed at tax time.

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How much tax does a sole trader pay in 2026/27?

As a UK sole trader you pay Income Tax and Class 4 National Insurance on your profit — that's your income after allowable expenses. There's no tax on the first £12,570 (your Personal Allowance), then it's charged in bands.

Income Tax bands (England, Wales & Northern Ireland)

£0 – £12,570: 0% (Personal Allowance)
£12,571 – £50,270: 20% (basic rate)
£50,271 – £125,140: 40% (higher rate)
Over £125,140: 45% (additional rate)

Your Personal Allowance shrinks by £1 for every £2 you earn over £100,000, which creates an effective 60% band between £100,000 and £125,140. Scotland sets its own Income Tax bands, so this tool's Income Tax figure won't match for Scottish taxpayers.

National Insurance

Class 4 NIC is 6% on profits between £12,570 and £50,270, then 2% above. Class 2 NIC is no longer required if your profit is above the £6,725 Small Profits Threshold — you still build your State Pension record for free. Below that, you can pay Class 2 voluntarily to protect your pension.

Why is my first tax bill so big? (Payments on Account)

If your tax and Class 4 NIC come to more than £1,000, HMRC asks for Payments on Account: two advance payments toward next year's bill, each 50% of this year's. So your first 31 January payment is effectively 150% of the year's tax, with another 50% due 31 July. It catches almost every first-timer out — the calculator above shows you both dates.

How much should I set aside?

A safe rule is to move your effective tax rate (shown above) of every payment you receive into a separate savings pot. Then January holds no surprises.

How to pay less — legitimately

The single biggest lever is claiming every allowable expense: tools, mileage, working from home, phone, software, professional fees. Every £1 of expenses saves you 20–40p in tax plus 2–6p in NIC. Most sole traders under-claim simply because they lose receipts — which is exactly what PocketReceipt fixes.

Making Tax Digital

From April 2026, sole traders over £50,000 must keep digital records and file quarterly under Making Tax Digital for Income Tax. Capturing receipts in an app as you go is the simplest way to be ready.