Self-employed tax calculator
Self-employed tax for the 2026/27 UK tax year is income tax on your profits: income minus allowable expenses, plus Class 4 National Insurance at 6% on profits between £12,570 and £50,270 and 2% above that (rates checked 2026-08-28 against gov.uk). Income tax itself works exactly as it does for employees, the same £12,570 personal allowance and the same bands, so a sole trader on £40,000 of profit pays the same income tax as an employee on a £40,000 salary, but less National Insurance (6% Class 4 versus 8% Class 1). Class 2 is now treated as paid automatically from £7,105 of profit, protecting your State Pension record at no cost. There is no employer and no PAYE: you calculate, report and pay it all yourself through self-assessment, including, above £1,000 of tax, the payments-on-account advance that catches most first-year sole traders off guard.
On £40,000 of profit you keep
£32,868.20 a year
£5,486.00 income tax + £1,645.80 Class 4 National Insurance = £7,131.80 to HMRC, 17.8% of profit.
The self-employed differences
| Class 4 NI (6% on £12,570–£50,270, 2% above) | £1,645.80 |
| Class 2 NI | £0, treated as paid |
| Employee Class 1 NI (for comparison, same income employed) | £2,194.40 |
Self-employment NI is cheaper than employment (6% vs 8% main rate), but there is no employer pension, sick pay or holiday behind it. Below £7,105 of profit, consider paying voluntary Class 2 to protect your State Pension record.
What counts before the tax: expenses and the trading allowance
Tax is charged on profit, not turnover, equipment, travel, a home-office proportion, software and professional fees all come off first. If your self-employment income is under £1,000 a year, the trading allowance makes it tax-free with no return needed; above that, you can claim either the flat £1,000 allowance or actual expenses, whichever is larger, never both.
Side hustle alongside a job?
Your employment income uses your personal allowance and lower bands first, so self-employed profits on top are taxed at your marginal rate from the first pound after the trading allowance, the same stacking logic as a second job. Class 4 NI still applies only to the profits.
Ways to keep more
- Pension contributions get full relief and reduce adjusted net income: the same £100k rules apply to profits.
- Consistent profits above roughly £50,000 are where a limited company starts to be worth comparing, run the limited company calculator on your numbers.
- Below £7,105 of profit, voluntary Class 2 at £3.65/week is the cheapest State Pension credit that exists.
Rates checked 2026-08-28 against gov.uk self-employed NI rates. Assumes trading profits only; CIS, partnerships and mixed income add rules this page doesn't model.