Sole Trader Tax Calculator – 2026/27

Use this calculator to work out how much tax to pay on your profits for the 2026/27 tax year.

Enter your turnover and business expenses below. The calculator works out your estimated Income Tax, Class 4 National Insurance and take-home profit.

Assumptions used in this calculator

• This calculator is aimed at self-employed people, particularly sole traders.
• IT contractors, however, rarely work as sole traders for several reasons. You can find out more here.
• The calculator uses the standard tax-free Personal Allowance of £12,570 and reduces it by £1 for every £2 of income above £100,000. The Personal Allowance is completely withdrawn at £125,140.
• It only includes income generated by your business and assumes you have no other untaxed sources of income.
• It assumes your business profit is also your taxable trading profit. It does not make separate adjustments for capital allowances, disallowable expenses, private use, the trading allowance or trading losses.
• It does not include pension contributions, student loan repayments or the High Income Child Benefit Charge.
• The payments on account figure is an estimate based on the tax calculated for the year. Your actual payments on account are normally based on the previous year’s Self Assessment liability.

What taxes do you pay if you’re self-employed?

You pay Income Tax and Class 4 National Insurance on your taxable profits. These taxes are normally dealt with through Self Assessment.

National Insurance for sole traders

• Class 4 NICs are 6% on profits between £12,570 and £50,270 and 2% above this threshold.
• If your profits are £7,105 or more, Class 2 NICs are treated as having been paid to protect your National Insurance record, but there is no Class 2 payment to make.
• If your annual profits are below the £7,105 Small Profits Threshold, you can choose to pay voluntary Class 2 NICs at £3.65 a week for 2026/27.
• Read this article to find out more about National Insurance, or see the official self-employed National Insurance rates.

Income Tax for sole traders

For taxpayers in England, Wales and Northern Ireland:

• You pay no Income Tax on your first £12,570 of income if you are entitled to the full Personal Allowance.
• The basic rate of 20% applies up to £50,270.
• The higher rate of 40% applies above £50,270.
• The additional rate of 45% applies above £125,140.
• Your Personal Allowance starts to fall once your income exceeds £100,000 and is reduced to zero once income reaches £125,140.

If you are a Scottish taxpayer, different rates and bands apply. For 2026/27 these range from the 19% starter rate to the 48% top rate. Select Scotland in the calculator above to use the Scottish rates.

You can see the current Income Tax rates on GOV.UK and the 2026/27 Scottish Income Tax rates here.

How does Self Assessment work?

• You must complete a Self Assessment tax return by 31st January following the end of the relevant tax year. Click here to register if you haven’t already done so.
• You must also pay any tax you owe by the relevant deadline, or penalties and late payment interest may apply.
• You may be required to make advance payments towards your next tax bill, known as payments on account. These are normally paid in two instalments, due on 31 January and 31 July.

Payments on account are not normally required if the relevant Self Assessment liability is less than £1,000, or if more than 80% of the tax due has already been collected outside Self Assessment.

What about pension contributions?

• Personal pension contributions made by a sole trader do not reduce the profits on which Class 4 National Insurance is calculated.
• You still receive tax relief on qualifying personal pension contributions. For example:
  • If you contribute to a personal pension using relief at source, the pension provider will usually claim basic-rate tax relief 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 may be able to claim additional tax relief through your Self Assessment tax return.

The calculator above does not include pension contributions, so speak to your accountant or adviser if you need to factor pension tax relief into your figures.

Can I offset business expenses against my profits?

• Yes. Make sure you claim all allowable business expenses to reduce your taxable profit.
• This includes costs such as office supplies, qualifying travel expenses, professional fees and a proportion of household costs if you work from home.
• Some larger purchases may qualify for capital allowances rather than being deducted as an ordinary business expense.
• See HMRC’s guide to self-employed expenses for the official rules.

References and further reading

• Our accountant has verified all calculations.
• You can compare your figures with the official GOV.UK tax calculator.
• Dozens of guides and help for sole traders at ByteStart.
• Please talk to an accountant if you have any questions related to your tax affairs.