£ Ledger UK self-employed tax, made clear

UK sole traders & freelancers · 2026/27

See what you actually take home after tax.

Enter your turnover and expenses. We work out your Income Tax and Class 4 National Insurance, and show the take-home pay that's really yours — with a clear picture of where every pound goes.

Taxable profit £42,000

Your take-home pay · 2026/27

£34,348

£2,862 a month

Income Tax
20 / 40 / 45% bands
−£5,886
Class 4 NI
6% then 2% on profit
−£1,766

Estimate for a sole trader in England, Wales & Northern Ireland. Class 2 NI is treated as paid (£0) at this profit. Excludes student loan, pension relief and payments on account — see the guide below.
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If you've just gone self-employed, the tax can feel like a black box. Unlike a salaried job where everything is deducted before you're paid, as a sole trader nothing is taken automatically — you're responsible for working it out and setting it aside. Here's exactly how it adds up for 2026/27.

You're taxed on profit, not turnover

This is the single most important thing to get right. HMRC taxes your profit — your total income minus your allowable business expenses — not everything that landed in your account. So tracking expenses properly directly lowers your bill.

Two things come out of your profit:

  • Income Tax — at 20%, 40% or 45%, depending on the band your profit falls into.
  • Class 4 National Insurance — 6% on profits between £12,570 and £50,270, then 2% above that.

The 2026/27 bands at a glance

  • Up to £12,570 — tax-free Personal Allowance (frozen until 2028).
  • £12,570 to £50,270 — 20% Income Tax (plus 6% Class 4 NI).
  • £50,270 to £125,140 — 40% Income Tax (plus 2% Class 4 NI).
  • Over £125,140 — 45% Income Tax. Your Personal Allowance also tapers away once income passes £100,000.
Worked example. Say you invoice £50,000 and have £8,000 of allowable expenses. Your profit is £42,000. You'd pay roughly £5,886 Income Tax and £1,766 Class 4 NI — leaving about £34,348 take-home. Try it in the calculator above with your own numbers.

Don't forget payments on account

The first-year sting most people miss: if your bill tops £1,000, HMRC asks you to prepay towards next year too, split across 31 January and 31 July. Budgeting for roughly 1.5× your first bill saves a nasty January surprise.

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Common questions

How is self-employed tax calculated in the UK?

On your profit — turnover minus allowable expenses — through Income Tax (20/40/45%) and Class 4 NI (6% then 2%). The first £12,570 is usually tax-free.

Do sole traders still pay Class 2 NI?

Mandatory Class 2 ended in April 2024. Above the Small Profits Threshold you're treated as having paid it (£0); below it you can pay voluntarily to protect your State Pension.

What counts as an allowable expense?

Costs that are wholly and exclusively for the business — software, travel, equipment, a share of home-office costs, professional fees and more. Keep records and receipts for everything you claim.

What are payments on account?

Advance payments towards next year's bill if you owe over £1,000, due 31 January and 31 July.

Estimates for sole traders in England, Wales & Northern Ireland for the 2026/27 tax year. Scotland has different Income Tax bands. This is general information, not personalised tax advice — verify with GOV.UK.