Sole trader tax calculator
Enter your turnover and expenses to see your tax, National Insurance and what you keep. The second table shows what HMRC will ask for on each date, payments on account included.
Rates for the 2026/27 tax year. Checked 7 November 2026.
| Turnover | £60,000.00 |
|---|---|
| Expenses | − £5,000.00 |
| Taxable profit | £55,000.00 |
| Income tax | £9,432.00 |
| Class 4 National Insurance | £2,356.60 |
| Class 2 National Insurance nothing to pay, the year counts | £0.00 |
| Total to pay through Self Assessment | £11,788.60 |
| Bill taken from profit | − £11,788.60 |
| Take-home | £43,211.40 |
| 31 January 2027First payment on account for 2026/27 | £5,894.30 |
|---|---|
| 31 July 2027Second payment on account for 2026/27 | £5,894.30 |
| 31 January 2028Balancing payment for 2026/27 plus first payment on account for 2027/28 | £5,894.30 |
| 31 July 2028Second payment on account for 2027/28 | £5,894.30 |
Set aside £982.38 a month, a twelfth of the bill. Payments on account are half of the income tax and Class 4, so £5,894.30 each; the dates assume last year’s bill was the same as this year’s. Rates for England, Wales and Northern Ireland. Scottish income tax is not supported yet.
Worked example: £60,000 turnover, £5,000 expenses
On £60,000 of turnover and £5,000 of expenses you pay £11,788.60 and keep £43,211.40, about £3,601 a month. Profit is £55,000. The first £12,570 is covered by the personal allowance, the next £37,700 is taxed at 20% (£7,540) and the last £4,730 at 40% (£1,892), so income tax is £9,432. Class 4 National Insurance is 6% of the £37,700 between £12,570 and £50,270 (£2,262) plus 2% of the £4,730 above it (£94.60), so £2,356.60. Class 2 is treated as paid.
That is an effective rate of 21.4%, and setting aside £982.38 a month covers it. Each payment on account is half the bill, £5,894.30. If last year’s bill was the same you paid two of those in January and July 2027, so nothing is left to settle for 2026/27 on 31 January 2028 and you pay the first £5,894.30 for 2027/28. If this is your first year, 31 January 2028 asks for £17,682.90, so put away more than the monthly figure from the start.
Why the result moves
- Profit above £50,270: income tax jumps from 20% to 40% while Class 4 drops from 6% to 2%.
- Between £100,000 and £125,140 the personal allowance is withdrawn, so each extra £1 costs 62p in income tax and Class 4.
- A PAYE job uses your allowance and basic-rate band first, so more of your profit lands at 40%.
- Pension: personal contributions widen the basic-rate band by the gross amount, which moves profit back from 40% to 20%.
- Student loan repayments add to the bill but not to payments on account.
When this calculator is wrong for you
- You live in Scotland. Scottish income tax bands are not supported yet, though Class 4 is the same.
- You work in construction under CIS. Deductions taken by contractors count towards your bill, and this calculator does not take them off.
- You have property, savings or dividend income. These are taxed at different rates and are not modelled.
- You are in a partnership. Enter only your share of the profit, and note that partnership returns have their own rules.
- Your profit is very different from last year. Payments on account are based on the previous year, so the dates here are an illustration.
Questions people ask
What are payments on account?
Advance payments towards next year’s bill. Each one is half of this year’s income tax and Class 4 National Insurance, due on 31 January and 31 July. Class 2, student loan and capital gains tax are not included. You do not make them if the bill was under £1,000 or at least 80% of your tax was taken at source, for example through a PAYE job.
Why is my first January bill so big?
In your first year nobody has asked you for anything in advance, so on 31 January you pay the whole bill for the year just ended plus the first payment on account for the year you are in. At the default figures that is £11,788.60 plus £5,894.30, so £17,682.90 in one go, with another £5,894.30 on 31 July.
Do I pay Class 2 National Insurance in 2026/27?
Not unless you choose to. Since April 2024 Class 2 is treated as paid once profits reach the small profits threshold of £7,105, so the year still counts towards your State Pension. Below that you can pay £3.65 a week voluntarily, £189.80 for the year, to protect your record.
Should I use the £1,000 trading allowance?
Only if your real expenses are under £1,000. You deduct one or the other, never both, and ticking the box uses whichever is bigger. The Budget on 28 October 2026 announced a rise to £3,000 from 6 April 2027, which does not change 2026/27.
How much should I put aside for tax as a sole trader?
A twelfth of the yearly bill each month covers the bill itself. At the defaults that is £982.38 a month. In the first year with payments on account you also need half as much again by 31 January, so many people put away a fixed share of every invoice, such as 25% to 30% of profit.
Can I reduce my payments on account?
Yes. If you expect next year’s profit to be lower you can ask HMRC to reduce them in your online account or on form SA303. If you reduce them too far you pay interest on the shortfall.
Does Making Tax Digital change any of this?
It changes how you report, not what you pay. From April 2026 sole traders and landlords with qualifying income over £50,000 send quarterly updates through software, and the threshold falls to £30,000 in April 2027 and £20,000 in April 2028. Qualifying income is turnover, not profit. The payment dates stay the same.
How this is worked out
Profit is turnover less expenses, or less the £1,000 trading allowance when you ask for it and it is bigger, never below zero. Income tax is worked on profit plus other income, with the 2026/27 personal allowance of £12,570 reduced by £1 for every £2 of adjusted net income over £100,000 and bands of 20%, 40% and 45%; gross pension contributions are taken off adjusted net income and added to the basic-rate and higher-rate limits. Tax already taken through PAYE is subtracted. Class 4 is 6% of profit between £12,570 and £50,270 and 2% above. Class 2 is treated as paid from £7,105 of profit, or charged at £3.65 for 52 weeks below that if you choose to pay. Student loans are 9% of income over the plan threshold and 6% over £21,000 for a postgraduate loan. Payments on account are each half of the income tax and Class 4 due through Self Assessment, required when that is £1,000 or more and less than 80% of income tax and Class 4 was collected at source. Amounts are rounded to the penny at each step.
Full formulas, rounding rules and test cases are on the methodology page. Every rate update is listed in the changelog.