Use this sole trader tax calculator to work out how much tax to pay on your profits for the 2025/26 tax year.
How to use the calculator
Fill in the yellow boxes to calculate your post-tax profits after deductions for expenses, income tax, and National Insurance Contributions.
Please scroll down for more details on how the deductions are calculated.
2025/26 calculations are the same as 2024/25 – no changes
2025/26 Sole Trader Tax Calculator
Open a Tide business account – get £50 cashback
Open a free business bank account with Tide, and get 12 months of free transfers and £50 cashback. No catches. Simply click here to find out more.
Assumptions used in this calculator
- This calculator is aimed at self-employed people (i.e. sole traders or members of a partnership).
- IT contractors, however, rarely work as sole traders for several reasons. You can find out more here.
- It assumes you qualify for the full tax-free personal allowance (currently £12,570).
- It only includes income generated by your business and assumes you have no other untaxed sources of income.
- It does not consider the High Income Child Benefit Charge – if you have children and earn over £60,000.
What taxes do you pay if you’re self employed?
You pay income tax and Class 4 NICs on your income. These taxes are paid at self assessment time.
National Insurance for sole traders
- Class 4 NICs are 6% on profits between £12,570 and £50,270 and 2% above this threshold.
- Since April 2024, Class 2 NICs are no longer mandatory. However, if your annual profits are below the £6,845 small profits threshold, you can still make payments of £3.50 a week. This ensures you have a credit towards the State Pension for the 2025/26 tax year.
- Read this article to find out more about National Insurance.
Income Tax for sole traders
- You pay no income tax on your first £12,570 of profits
- Basic rate (20%) applies for profits between £12,571 and £50,270.
- Higher rate (40%) applies for profits between £50,271 and £125,140.
- Additional rate (45%) applies to profits over £125,140.
How does self assessment work?
- You must complete a self assessment tax return by 31st January following the end of the previous tax year (ending 5th April). Click here to register if you haven’t already done so.
- You must also pay any tax you owe by the same date, or penalties and late payment interest will apply.
- You may be required to make advance payments towards your tax bill, known as payments on account. These are typically due on 31 January and 31 July each year.
What about pension contributions?
- Personal pension contributions for a sole trader are paid from post-tax earnings.
- Even though the contributions are paid from post-tax earnings, you still receive tax relief. For example:
- If you contribute to a personal pension, the pension provider will usually claim basic-rate tax relief (20%) on your behalf. So, for every £80 you contribute, £100 goes into your pension pot.
- If you are a higher rate or additional rate taxpayer, you can claim additional tax relief via your self assessment tax return.
Can I offset business expenses against my profits?
- Yes, certainly. Make sure you claim all allowable business expenses to reduce your taxable profit.
- This includes costs such as office supplies, travel expenses, and a portion of home utility bills if you work from home.
- See HMRC’s guide to self employed expenses for the official lowdown.
References and further reading
- Our accountant has verified all calculations.
- You can calculate your sole trader taxes using the official GOV.UK self-employed calculator. The results match ours, of course!
- Please talk to an accountant if you have any questions related to your tax affairs.