🧾 Free UK Calculator · 2026/27

Self-Employed Tax Calculator
Sole Trader & Freelancer

Enter your revenue and expenses to see your taxable profit, income tax, Class 4 NI, take-home pay and payments on account schedule — all in one place.

Your business details

Your total business turnover before any deductions
£
Travel, materials, subscriptions, office costs etc. Enter £0 if unsure.
£
Personal pension payments reduce your adjusted net income
£
First-year traders don't pay payments on account
Taxable profit
£40,000
Revenue £45,000 minus expenses £5,000
💡 Class 2 NI abolished: From April 2024, you no longer pay Class 2 NI. Only Class 4 NI applies — 6% on profits between £12,570 and £50,270, then 2% above. This is lower than the 8% employed workers pay.

Your tax breakdown

Annual take-home
£32,294
£2,691/month · £621/week
Effective tax rate
19.3%
Revenue£45,000
Business expenses− £5,000
Taxable profit£40,000
Personal allowance− £12,570
Income tax− £5,486
Class 4 NI (6%/2%)− £1,647
Take-home pay£32,867
You pay (self-employed)
£1,647
Class 4 only — 6%/2%
Employee would pay
£2,194
Class 1 — 8%/2%

⚠️ Payments on account

2026/27 HMRC rates. England/Wales. Standard personal allowance assumed. Results are estimates — consult an accountant for your specific situation.

How self-employed tax works

As a sole trader, you pay tax on your net profit — your total revenue minus allowable business expenses. This profit is then subject to income tax at exactly the same rates as employees (20%, 40%, 45%), plus Class 4 National Insurance.

The key difference from employment is that nothing is deducted automatically. You declare your income and expenses through a Self Assessment tax return each year, and pay what you owe by 31 January following the tax year end. If your bill exceeds £1,000, HMRC also requires advance payments toward the following year — these are called payments on account and often catch first-year self-employed people off guard.

The good news: Class 2 NI was abolished from April 2024. You now only pay Class 4 NI, which is 6% up to £50,270 — lower than the 8% employees pay on the equivalent band.

How to reduce your self-employed tax bill

Claim all allowable expenses

Travel, tools, software, professional subscriptions, marketing, accountancy fees. Every £1 of expense saves you 20p–40p in tax depending on your band.

Working from home: £6/week (£312/yr) flat rate — no receipts needed

Pension contributions

Personal pension contributions reduce your adjusted net income. Particularly powerful if you're close to the £50,270 or £100,000 thresholds — they can pull you back into a lower band.

Full tax relief at your marginal rate — 20%, 40% or 45%

Trading allowance

If your total expenses are under £1,000, you can claim the £1,000 trading allowance instead — no receipts required. Simpler and sometimes more than your actual costs.

Worth up to £200 in basic rate tax relief

Annual Investment Allowance

Capital expenditure on equipment, machinery and tools can be deducted in full in the year of purchase under the AIA (up to £1,000,000 per year). No need to depreciate over time.

Deduct the full cost upfront — not over several years

Spread income across tax years

If you can invoice in a way that splits income across two tax years, you may keep more in the lower rate band. Particularly useful as you approach the £50,270 threshold.

Basic rate vs higher rate: 20% difference per £1

Consider a limited company above £70k

At profits consistently above £70,000, a salary-plus-dividends structure via a limited company typically saves £3,000–£10,000 per year over sole trading. Accountancy costs are higher though.

Usually worth it above £70k — speak to an accountant first

Frequently asked questions

Self-employed sole traders pay income tax at the same rates as employees: 0% up to £12,570, 20% on profits between £12,571 and £50,270, 40% between £50,271 and £125,140, and 45% above. They also pay Class 4 NI at 6% on profits between £12,570 and £50,270, and 2% above. Class 2 NI was abolished from April 2024.
Class 2 NI was abolished from April 2024 — you no longer pay it. Class 4 NI is still payable: 6% on profits between £12,570 and £50,270, and 2% above. If your profits are above £6,725, your NI record is automatically credited, building State Pension entitlement without any additional payment.
If your Self Assessment tax bill exceeds £1,000, HMRC requires advance payments toward next year's bill — called payments on account. You pay two equal instalments: 50% by 31 January and 50% by 31 July. In your first year of self-employment, you only pay your actual bill. In year two, you pay your bill plus the first payment on account — which is why the second January payment is often a shock. Always budget for it from day one.
You can deduct expenses wholly and exclusively for business: office costs, travel (not commuting), tools and equipment, professional subscriptions, marketing, accountancy fees, and a proportion of home working costs (or £6/week flat rate without receipts). If your total expenses are under £1,000, the £1,000 trading allowance may be simpler.
MTD ITSA requires sole traders with income over £50,000 to keep digital records and submit quarterly updates to HMRC from April 2026. The requirement extends to those earning £30,000–£50,000 from April 2027. You will need HMRC-compatible accounting software to comply. Below £30,000, no mandatory date has been set.
For most sole traders, a limited company becomes tax-efficient at around £50,000–£70,000 in annual profit. Below that, the tax saving is usually outweighed by higher accountancy costs (£1,000–£2,000 more per year) and more administration. Above £70,000, a salary-plus-dividends structure typically saves £3,000–£10,000 per year. Always get accountancy advice before making the switch.

More tools for the self-employed

Reduce your tax bill with pension contributions, or check what you'd earn as an employee.

Pension sacrifice → Salary calculator →

📋 Source: All figures based on HMRC published rates for the 2026/27 tax year. For official rates visit gov.uk/income-tax-rates and gov.uk/national-insurance-rates. Results are estimates — not financial or tax advice. Consult a qualified accountant for your specific situation.