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🇬🇧 UK-only · Updated for 2026/27 Tax Year

Self Employed Tax Calculator

Model your exact sole trader tax bill. Includes Class 4 NI, allowable expenses, and full Payment on Account (POA) forecasting.

✓Trading Allowance Included✓Class 4 NI Update✓Payment on Account Forecast✓Free — no sign-up

Your Business Income

Tax Breakdown

Taxable Profit:£0.00
Income Tax (PAYE bands):-£0.00
Class 4 NI (6% / 2%):-£0.00
Total Tax Bill:-£0.00
Net Profit (Take-Home):£0.00
(£0.00 / month)

Self Assessment Payments

✅

Your tax bill is under £1,000, so you do not have to make Payments on Account.

Due by 31 Jan£0.00
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How Much Tax Do Self-Employed People Pay in 2026/27?

As a self-employed sole trader, you do not pay tax on your total revenue. You only pay tax on your Taxable Profit (Revenue minus Allowable Expenses). If you also have a standard PAYE job alongside your business, you can model your combined tax liability using our Side Hustle Tax Calculator.

Once your profit is calculated, you are subject to the standard UK Income Tax bands (20%, 40%, and 45%), exactly the same as an employee. You have a £12,570 tax-free personal allowance, though this begins to taper away if your profits exceed £100,000 (which you can learn about in our £100k Tax Trap Guide).

Class 4 National Insurance — How It's Calculated

Instead of paying standard Employee National Insurance, sole traders pay Class 4 National Insurance. The rates were cut recently, meaning for the 2026/27 tax year you will pay:

  • 0% on profits up to £12,570.
  • 6% on profits between £12,570 and £50,270.
  • 2% on profits above £50,270.

Note: Class 2 National Insurance (the flat weekly rate) was officially abolished in April 2024. You no longer need to pay it, though if your profits exceed £6,725 you will still receive the National Insurance credits toward your State Pension automatically.

Allowable Expenses You Can Claim

To legally minimize your tax bill, you must deduct your allowable business expenses from your revenue. The golden rule from HMRC is that an expense must be "wholly and exclusively" for the purposes of your trade.

Common allowable expenses include:

  • Office Costs: Stationery, phone bills, internet, software subscriptions.
  • Travel: Business train tickets, hotels, and vehicle costs. (Many choose to use the HMRC simplified mileage rate of 45p per mile for the first 10,000 miles).
  • Financial: Accountancy fees, business insurance, bank charges.
  • Cost of Sales: Stock, raw materials, or sub-contractor fees.

Your Self Assessment Bill + Payments on Account

The biggest shock for newly self-employed individuals is the January tax bill. If your total tax liability for the year is over £1,000 (and less than 80% was deducted at source), HMRC will force you to make Payments on Account (POA).

Payments on Account are advance payments towards next year's tax bill. They are split into two halves:

  • 31 January: You pay your entire tax bill for the previous year, PLUS 50% of that same amount as your first Payment on Account for the current year.
  • 31 July: You pay the remaining 50% as your second Payment on Account.

Our calculator automatically forecasts these payments so you aren't caught off guard. You can also use our dedicated Payment on Account Calculator to adjust these if your profits are falling.

Trading Allowance — When No Tax Is Due

If you have a very small business or side hustle, the government gives you a £1,000 "Trading Allowance". This means that if your total gross revenue (not profit, but total income) is less than £1,000 in a tax year, it is completely tax-free and you do not even need to report it to HMRC.

If your revenue is over £1,000, you have a choice. You can either deduct your actual exact expenses to find your profit, OR you can simply deduct the £1,000 Trading Allowance as a flat expense. You cannot do both. Generally, if your actual expenses are less than £1,000, using the Trading Allowance is mathematically better.

Self Employed Rules

Frequently asked questions

How much tax do I pay if I'm self-employed in 2026?
As a sole trader, you pay standard Income Tax (20%, 40%, or 45%) on profits above your £12,570 Personal Allowance. You also pay Class 4 National Insurance, which is 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270. Class 2 NI was abolished in 2024.
What National Insurance do self-employed people pay in 2026?
For the 2026/27 tax year, self-employed individuals only pay Class 4 National Insurance. The rate is 6% on profits between £12,570 and £50,270, and 2% on anything above that. Class 2 NI has been abolished, though you still get credits towards your State Pension if your profits exceed £6,725.
What expenses can I claim as self-employed?
You can deduct any costs that are 'wholly and exclusively' for your business. Common allowable expenses include office costs, travel (such as the 45p per mile HMRC flat rate), stock, marketing, insurance, and accountancy fees. You cannot claim for personal expenses.
When do I need to register as self-employed with HMRC?
You must register for Self Assessment by 5 October following the end of the tax year in which you started trading. For example, if you start a business in July 2025 (during the 2025/26 tax year), you must register by 5 October 2026.
What is the trading allowance for self-employed people?
The trading allowance is a flat £1,000 tax exemption for small businesses and side hustles. If your total gross revenue (not profit) is under £1,000 for the tax year, you owe no tax and do not even need to declare it to HMRC. If your revenue is over £1,000, you can choose to deduct this £1,000 allowance instead of calculating your actual expenses.
How is Class 4 National Insurance calculated?
Class 4 NI is calculated annually on your self-assessment tax return. You pay 0% on profits up to £12,570, then 6% on the chunk of profit between £12,570 and £50,270, and finally 2% on any profit above £50,270.
Do I need to do a Self Assessment tax return?
Yes, if you are a self-employed sole trader and your gross revenue exceeds £1,000 in a tax year, you are legally required to file a Self Assessment tax return, even if your total profit is below the £12,570 personal allowance and you owe no tax.
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