How Much Tax Do I Pay Self-Employed in the UK? (2026/27)

How much tax do you pay when you are self-employed in the UK? You pay Income Tax and Class 4 National Insurance on your profit, which is your income minus your allowable expenses. For 2026/27 the first £12,570 of profit is tax-free, then Income Tax is 20% up to £50,270, and Class 4 National Insurance adds 6% on top over the same band. A sole trader making £30,000 of profit owes about £4,531 in total. This guide works the number in full and shows what you owe at each profit level.

There is no single "self-employed tax rate", because two charges stack on the same profit. The figure that both are worked out on is your profit, and profit is set by your records: the more allowable costs you capture, the lower the profit you are taxed on. An expense tracker that keeps those costs together is what makes the profit figure, and so the bill, accurate.

Self-employed tax is two charges on one profit

As a sole trader you are not taxed on the money that comes into the business. You are taxed on your profit. HMRC's guidance on expenses if you're self-employed puts it plainly: "if your turnover is £40,000 and you claim £10,000 in allowable expenses, you'll only pay Income Tax on the remaining £30,000, known as your taxable profit."

That taxable profit then carries two separate charges:

• Income Tax, at the same rates an employee pays, after your Personal Allowance.
• Class 4 National Insurance, a second percentage charged only on self-employed profit.

Both are reported on the same Self Assessment tax return and paid together, which is why the total can feel steeper than the headline Income Tax rate suggests. There used to be a third charge, Class 2 National Insurance, but since April 2024 it no longer has to be paid by most sole traders. More on that below.

The 2026/27 rates and thresholds

Everything below is for the 2026/27 tax year, which runs from 6 April 2026 to 5 April 2027. The Personal Allowance and the rate bands come from HMRC's Income Tax rates and allowances; the National Insurance figures come from the self-employed National Insurance rates.

Two features of the table do most of the work. The Personal Allowance is the £12,570 slice of profit you pay no Income Tax on, and it shrinks by £1 for every £2 you earn over £100,000, reaching zero at £125,140. Class 4 National Insurance starts at the same £12,570 point as Income Tax and runs at 6% right across the basic-rate band, so on most sole-trader profit the real marginal charge is 26%, not 20%.

Class 2 National Insurance is the one that changed. HMRC now treats it as "having been paid to protect your National Insurance record" once your profit passes the Small Profits Threshold of £7,105, so there is nothing to hand over. Below £7,105 you can still pay it voluntarily at £3.65 a week to keep the year counting towards your State Pension. Our self-employed National Insurance guide covers how both classes land on the return.

Worked example: tax on £30,000 of profit

Take a sole trader whose business turned over £40,000 and who claimed £10,000 of allowable expenses, leaving £30,000 of taxable profit (the same figures HMRC uses). Assume no other income, so the full Personal Allowance is available.

Income Tax. The first £12,570 is covered by the Personal Allowance. That leaves £17,430 taxed at the 20% basic rate, which is £3,486.

Class 4 National Insurance. This is charged on profit above £12,570 too, so the same £17,430 is charged at 6%, which is £1,045.80.

Class 2 National Insurance. Profit of £30,000 is well above the £7,105 threshold, so Class 2 is treated as paid. Nothing to add.

Total to HMRC: £4,531.80. That is 15.1% of the £30,000 profit. The Income Tax on its own would have been £3,486, so the Class 4 National Insurance adds roughly a third again on top, which is the part first-time sole traders most often forget to budget for.

How much tax you pay at different profit levels

Because the Personal Allowance and the National Insurance bands are fixed, your effective rate climbs as profit rises. The table below runs the same calculation across common profit figures for 2026/27, assuming no other income.

At £70,000 the profit has crossed £50,270, so part of it is taxed at the 40% higher rate while the Class 4 rate on that top slice drops to 2%. That combination is why the jump from £50,000 to £70,000 adds far more Income Tax than National Insurance. Below £50,270, every extra £100 of profit costs £26 (20% Income Tax plus 6% Class 4); above it, an extra £100 costs £42 (40% plus 2%).

Allowable expenses lower the profit your whole bill is sized on

Since both charges are worked out on profit, and profit is turnover minus allowable expenses, every legitimate cost you record pulls the whole bill down. HMRC lets you deduct costs "related to business purchases", but not "money taken from your business for personal use". Our guide to self-employed allowable expenses covers what qualifies.

The arithmetic is direct. In the basic-rate band, £100 of expenses you record saves £26 in tax, because it removes £100 of profit that would have been taxed at 20% plus 6%. Miss £2,000 of receipts over the year and you hand HMRC an extra £520 on money that was really a business cost. This is where capturing costs as they happen matters more than any year-end scramble: a photographed receipt filed the day you get it is a cost that lowers the profit; a faded till slip lost in a drawer is not.

If your trading income for the year is £1,000 or less, you may not need to report it at all, and if your costs are under £1,000 you can claim the flat £1,000 trading allowance instead of your actual expenses. HMRC's rule is that you cannot do both: "You cannot claim expenses if you use your £1,000 tax-free trading allowance."

When you pay, and the first-year surprise

Self Assessment tax is paid after the tax year ends. The tax on 2026/27 profit is due by 31 January 2028, alongside registration and filing deadlines our Self Assessment deadlines guide lays out in full.

The catch is payments on account. If your bill is over £1,000 and less than 80% of your tax was collected at source, HMRC asks you to pay towards next year's bill in advance, in two instalments "due by midnight on 31 January and 31 July", each "usually half of the tax you owed the previous year". In practice your first January bill can be 150% of the tax for the year: the full amount owed plus a first payment on account of half again. It is the same total tax spread differently, but it catches people who budgeted only for the headline figure.

Common mistakes

Budgeting for Income Tax but not National Insurance. The 20% rate is only part of it. Class 4 adds 6% across the basic-rate band, so set aside for both. On profit inside that band, a rough 25% to 30% of profit covers Income Tax and Class 4 with a margin.

Taxing turnover instead of profit. Tax rides on profit, not on the money that came in. If you have not subtracted your allowable expenses, your mental estimate of the bill is too high, and you are probably not capturing every deductible cost.

Assuming Class 2 still has to be paid. Since April 2024, sole traders with profit above the Small Profits Threshold have Class 2 treated as paid. You do not send HMRC a separate Class 2 payment on top of Class 4.

Forgetting the payment on account. The first year you owe more than £1,000, the January bill includes a payment towards the next year. It is not an extra tax, but it doubles the cash you need on 31 January if you had not planned for it.

How SparkReceipt fits

Your self-employed tax is worked out on profit, so the number depends entirely on how completely you record your income and costs. SparkReceipt scans your receipts and sorts them into categories as you go, keeps your income alongside them, and turns the year into a tax-ready expense report with a clean profit figure at the bottom. It does not file your Self Assessment return or calculate your tax for you, and it will not tell you what to set aside. What it does is keep the records that make your profit right, which is the figure both Income Tax and National Insurance are built on. See pricing to start.

Frequently asked questions

Do I pay tax on my turnover or my profit?

On your profit. Profit is your turnover minus your allowable business expenses. If you turned over £40,000 and had £10,000 of allowable costs, you are taxed on £30,000, not £40,000.

How much can I earn self-employed before paying tax?

Your first £12,570 of profit is covered by the Personal Allowance, so below that you pay no Income Tax, and Class 4 National Insurance also starts at £12,570. Separately, you must tell HMRC about self-employment once your gross trading income passes £1,000 in a tax year, even if no tax is due.

Do I pay National Insurance as well as Income Tax?

Yes. Class 4 National Insurance is charged at 6% on profit between £12,570 and £50,270, and 2% above that, on top of Income Tax. Class 2 National Insurance is treated as paid once your profit passes £7,105, so there is nothing extra to hand over.

How much should I set aside for tax?

As a guide, a sole trader inside the basic-rate band pays an effective rate of roughly 4% to 19% of profit, rising with profit, before payments on account. Setting aside 25% to 30% of profit covers Income Tax and Class 4 for most people below £50,270, with a buffer for the first payment on account.

When do I pay it?

The tax on a tax year is due by 31 January after that year ends. If your bill tops £1,000, you also make payments on account towards the next year on 31 January and 31 July, each half of the previous year's bill.

Does having a job as well change the numbers?

Yes. If you also have PAYE employment, your Personal Allowance is usually set against that job, so your self-employed profit can be taxed from the first pound. Our guide to tax on a second job or side income works that case.

Key takeaways

• Self-employed tax in the UK is two charges on one figure: Income Tax and Class 4 National Insurance, both worked out on your profit.
• For 2026/27, the first £12,570 of profit is tax-free, then Income Tax is 20% and Class 4 is 6% across the same band, so the real marginal charge on basic-rate profit is 26%.
• A sole trader with £30,000 of profit owes about £4,531, an effective rate of 15.1%; the effective rate rises with profit as more of it crosses £50,270 into the 40% band.
• Profit is turnover minus allowable expenses, so every cost you record lowers both charges; £100 of expenses saves £26 in the basic-rate band.
• Class 2 National Insurance is treated as paid above £7,105 of profit, so most sole traders no longer pay it separately.
• The tax is due on 31 January after the tax year, and once your bill passes £1,000 the January payment includes a payment on account towards next year.