- Self-employed people pay Income Tax and Class 4 National Insurance on their profits, both collected through Self Assessment.
- For 2026/27 the personal allowance is £12,570, with tax at 20%, 40% and 45% and Class 4 NI at 6% then 2%.
- If your tax bill tops £1,000, HMRC adds Payments on Account, which can make your first bill far larger than expected.
Wondering how much tax you’ll pay self-employed in the UK? On your 2026/27 profits you’ll pay Income Tax at 20%, 40% or 45% above your £12,570 personal allowance, plus Class 4 National Insurance at 6% then 2%.
Both are worked out on your profit, not your turnover, and both go through one Self Assessment return.
So someone with £30,000 of profit pays roughly £4,530 in total, while £50,000 lands around £9,930. The exact figure depends on your allowable expenses and any other income you have.
If you’d rather have someone else run the numbers, Sleek’s sole trader accountant service handles the lot.
Try our self employed Tax Calculator
Self-employed tax calculator
Enter your annual profit (income after expenses) to see your Income Tax, National Insurance and what to set aside.
Assumes self-employment is your only income. Scotland sets its own income tax bands; National Insurance is the same UK-wide. Figures are a guide, not tax advice.
How is self-employed tax calculated?
Your self-employed tax is calculated on your profit, which is your business income minus your allowable expenses. You’re not taxed on every pound that comes in, only what’s left after costs.
That profit figure then gets hit with two things: Income Tax and Class 4 National Insurance. Both are collected through the same Self Assessment return once a year.
Turnover is what you invoice. Profit is what you keep after expenses. Get your sole trader tax basics right here, because everything else builds on this number.
Here’s the quick version of what applies to your profit.
Charge | Rate for 2026/27 | Applies to |
Income Tax | 20%, 40%, 45% | Profit above £12,570 |
Class 4 NI | 6%, then 2% | Profit above £12,570 |
Class 2 NI | £0 if profit is £6,845+ | Treated as paid |
What are the current income tax bands?
The income tax bands for 2026/27 give you a tax-free personal allowance of £12,570, then three rates on anything above it. These figures are frozen until at least April 2031, so they won’t rise with inflation.
That freeze matters. As your profit grows, more of it gets dragged into the higher bands even though the rates haven’t moved.
Band | Taxable profit | Rate |
Personal allowance | Up to £12,570 | 0% |
Basic rate | £12,571 to £50,270 | 20% |
Higher rate | £50,271 to £125,140 | 40% |
Additional rate | Over £125,140 | 45% |
One catch to watch. If your income goes over £100,000, your personal allowance shrinks by £1 for every £2 above that line, disappearing entirely at £125,140.
Scotland runs its own bands and rates, so the figures above apply to England, Wales and Northern Ireland. If you want the finer detail, our guide to UK tax brackets for freelancers breaks it down.
What National Insurance do the self-employed pay?
Self-employed people pay Class 4 National Insurance on their profits, charged at 6% on profit between £12,570 and £50,270, then 2% on anything above £50,270. It’s collected alongside your Income Tax through Self Assessment.
Class 2 National Insurance is a separate story, and it’s changed.
Class 4: the one you’ll actually pay
Class 4 works in slices, just like Income Tax. You pay 6% only on the portion of profit sitting between the two thresholds, and 2% on the bit above the top one.
So pushing your profit past £50,270 doesn’t make your whole income more expensive. Only the slice above that point moves to the lower 2% rate.
For a full breakdown of the thresholds and how they interact with your bands, see our guide to self-employed National Insurance.
Class 2: mostly gone, but still worth knowing
Mandatory Class 2 was abolished back in April 2024, so most sole traders no longer pay it at all. If your profit is £6,845 or more, Class 2 is treated as paid and you get your National Insurance credit for the year for free.
If your profit falls below £6,845, you can choose to pay voluntary Class 2 at £3.65 a week for 2026/27 to protect your State Pension record. It’s optional, but those qualifying years count towards your pension later.
Worked example: tax at different income levels
The clearest way to see what you’ll owe is to run real profit figures through the 2026/27 rates. Below are three common levels, each showing Income Tax and Class 4 NI combined.
These assume self-employment is your only income and you’re taking the standard personal allowance.
Annual profit | Income Tax | Class 4 NI | Total tax | Take-home |
£30,000 | £3,486 | £1,044 | £4,530 | £25,470 |
£50,000 | £7,486 | £2,244 | £9,730 | £40,270 |
£80,000 | £19,432 | £2,857 | £22,289 | £57,711 |
At £30,000, you’re taxed on £17,430 of profit. That’s 20% Income Tax and 6% Class 4 NI on the same slice.
At £80,000, part of your profit crosses into the 40% band and your Class 4 NI drops to 2% above £50,270, which is why the NI figure barely moves between £50k and £80k.
These totals are before any allowable expenses. Every legitimate cost you claim reduces your profit, and therefore both your Income Tax and your NI.
How much should I set aside for tax?
As a rough rule, setting aside 25% to 30% of your profit covers most sole traders comfortably at basic-rate level. Higher earners should push that towards 40% or more once profit climbs into the 40% band.
The safest approach is to move a percentage into a separate account every time you get paid, rather than scrambling in January.
There’s one thing that catches almost every first-timer out, and it deserves its own heading.
Watch out for Payments on Account
If your Self Assessment bill comes to more than £1,000, HMRC asks you to pay towards next year’s tax in advance. These are called Payments on Account, and they’re each 50% of your previous year’s bill.
The first is due on 31 January alongside your actual bill, and the second on 31 July. So your first real January payment can be 150% of the tax you were expecting.
Say your first bill is £4,000. In that January you’d pay the £4,000 plus a £2,000 Payment on Account, then another £2,000 the following July. It’s the same tax, just collected earlier, but the timing surprises people.
If you know your income is dropping, you can apply to reduce these. Our walkthrough of self assessment for freelancers covers how the whole return fits together.
How Sleek helps with self-employed tax
Working out your profit, applying the right bands, tracking your National Insurance and budgeting for Payments on Account is a lot to juggle while you’re actually running your business. Getting it wrong means either overpaying or a nasty January shock.
Sleek takes it off your plate. We calculate what you owe, tell you exactly what to set aside, and file your Self Assessment so nothing’s missed.
You get a clear number and a deadline you can trust, instead of guesswork.
Disclaimer: The preceding information is not legal advice. This content is aimed to provide general guidance. For more formal or legal advice, contact Sleek directly.
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FAQs on self-employed tax
Do I pay tax on my turnover or my profit?
You pay tax on your profit, not your turnover. Profit is what’s left after you deduct allowable business expenses from your income. So if you invoice £40,000 but have £8,000 of legitimate costs, you’re taxed on £32,000. Claiming every valid expense directly lowers both your Income Tax and your Class 4 National Insurance.
When do I need to register for Self Assessment?
You must register by 5 October following the end of the tax year in which you started self-employment. For example, if you began trading in the 2026/27 tax year, register by 5 October 2027. Miss it and you risk a penalty. Registering gives you a Unique Taxpayer Reference, which you’ll need to file your return.
What happens if I have a job and self-employed income?
Both sources are added together to work out your tax. Your employer handles PAYE on your salary, but your self-employed profit sits on top and is taxed at whatever band your combined income reaches. You declare the self-employed portion through Self Assessment. Your personal allowance is usually applied to your employment income first.
When are my self-employed tax payments due?
Your main Self Assessment bill is due by 31 January after the tax year ends, so 2026/27 tax is due by 31 January 2028. If Payments on Account apply, you’ll also pay on 31 July. Filing online is due by 31 January too, giving you until then to submit and settle in one go.
Can I reduce my self-employed tax bill legally?
Yes. Claiming all your allowable expenses is the simplest and most effective route, as every valid cost reduces your taxable profit. Pension contributions, the trading allowance and capital allowances on equipment can also cut your bill. Keeping accurate records throughout the year means you never miss a deduction you’re entitled to claim.
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Do I still pay National Insurance if I make a small profit?
If your profit is below £6,845 for 2026/27, you pay no compulsory National Insurance. You can choose to pay voluntary Class 2 at £3.65 a week to protect your State Pension. Between £6,845 and £12,570 you pay nothing but still get a free NI credit. Class 4 only kicks in once profit passes £12,570.
What if my income changes a lot each year?
Variable income makes budgeting harder, but the rules still work in your favour. If you know this year’s profit will be lower than last year’s, you can apply to reduce your Payments on Account through your HMRC account. Setting aside a percentage of each payment as it arrives, rather than a fixed monthly sum, keeps you covered when income swings.
