How much tax do sole traders pay in 2026/27? Income Tax, 6% Class 4 NI, Class 2, payments on account and what to set aside, with £15k to £80k examples.
When you go self-employed, nobody takes tax from your income before it reaches you. You work it out at the end of the year through Self Assessment and pay it in one go, sometimes with an extra advance payment on top. That is why so many new sole traders are caught out by their first tax bill. This guide explains exactly what you pay in 2026/27: Income Tax, Class 4 National Insurance, Class 2, and student loan. It includes a table of real examples from £15,000 to £80,000 profit and a simple rule for how much to set aside each month. Every rate is taken from GOV.UK.
To work out your own bill, use the free Self-Employed Tax Calculator.
As a sole trader in England, Wales or Northern Ireland in 2026/27, you pay:
Sources: GOV.UK – Self-employed National Insurance rates and GOV.UK – Income Tax rates.
You pay tax on your profit, which is your self-employed income minus allowable business expenses. Examples are equipment, software, materials, a share of phone and internet costs, travel for work (not your commute) and accountancy fees. If your expenses are low, you can choose the £1,000 trading allowance instead of deducting actual expenses. If your total trading income is £1,000 or less, you may not have to tell HMRC at all, though there are exceptions. Source: GOV.UK – Tax-free allowances on property and trading income.
Calculated for England, Wales or NI, with no other income and no student loan, using the Self-Employed Tax Calculator:
Income Tax is identical, but NI is lower for the self-employed: 6% instead of 8% on the main band. The bigger difference is cash flow. Employees never see their tax, while sole traders must save for it. Compare with the Take-Home Pay Calculator.
Ellie is a freelance photographer in Manchester. Her income is £36,000 and her allowable expenses are £6,000, so her profit is £30,000.
If Ellie also has a Plan 2 student loan, add 9% of her income over the Plan 2 threshold. On £40,000 profit that would be £955.35 a year; see the Student Loan Repayment Calculator.
GOV.UK explains that HMRC usually asks for payments on account: two advance payments towards next year's bill, each half of the previous year's bill. They are due on 31 January and 31 July. You don't have to make them if your last Self Assessment bill was less than £1,000, or if more than 80% of your tax was already paid at source, for example through a tax code. Source: GOV.UK – Payments on account.
In practice, this means that in your first January as a sole trader you could pay:
That is £6,797.70 in one January, followed by another £2,265.90 in July. If you know your profit will fall, GOV.UK says you can ask HMRC to reduce your payments on account, online or by post.
A simple and safe method:
As a rough guide from the table, a basic-rate sole trader needs about 10% to 19% of profit before student loan. Higher-rate sole traders need 23% or more.
Since profits of £7,105 or more count as having paid Class 2 automatically, most sole traders don't have to think about it. If your profits are under £7,105, you can choose to pay voluntary Class 2 at £3.65 a week (£189.80 a year) to keep building your State Pension record. Source: GOV.UK – Self-employed National Insurance rates.
Scottish sole traders pay Scottish Income Tax: 19% starter, 20% basic, 21% intermediate, 42% higher, 45% advanced and 48% top rate. Class 4 NI is the same as in the rest of the UK. Source: GOV.UK – Scottish Income Tax. The calculator has a Scotland option.
Missing these triggers penalties. See Self Assessment late penalties explained. Deadlines source: GOV.UK – Self Assessment deadlines.
For 2026/27 in England, Wales or NI: £3,486 Income Tax plus £1,045.80 Class 4 NI, which is £4,531.80 in total.
6% on profits between £12,570 and £50,270, and 2% on profits above £50,270.
No, if your profits are £7,105 or more. It is treated as paid. Below that, you can pay voluntarily at £3.65 a week.
Profit: your income minus allowable expenses, or minus the £1,000 trading allowance if you choose that instead.
Usually because of payments on account. In your first January you may pay the full first-year bill plus half of it again in advance.
No Income Tax or Class 4 NI if that is your only income. You may still need to register for Self Assessment if your trading income is over £1,000.
Rates were checked on GOV.UK in October 2026. This is general information, not tax advice. Speak to HMRC or an accountant about your own situation.
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