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🧮 Self-Employed Tax Calculator (UK 2026/27)

Estimate your Income Tax, Class 4 National Insurance and total Self Assessment bill as a UK sole trader or freelancer. Using 2026/27 HMRC rates and thresholds.

⚠️ Estimate only. Does not include student loans, marriage allowance transfer, pension contributions or capital allowances. Confirm via HMRC Self Assessment. Not financial advice.

UK Self-Employed Tax: 2026/27 At a Glance

As a sole trader you pay tax on your profit (income minus allowable expenses), not your turnover. Three things come out of that profit: Income Tax, Class 4 National Insurance, and — only if you opt in — voluntary Class 2 NI.

Worked Example: £55,000 Income, £8,000 Expenses

Using the calculator's default figures — £55,000 of self-employed income with £8,000 of allowable expenses (so £47,000 profit) and no other PAYE income — here is the 2026/27 breakdown:

ItemAmount
Taxable profit£47,000.00
Income Tax (20% on £34,430 above the allowance)−£6,886.00
Class 4 NI (6% on £34,430)−£2,065.80
Class 2 NI£0.00 (opt-out)
Total tax + NI · Take-home profit£8,951.80 · £38,048.20

That is an effective tax rate of 19.0% on profit. Enter your own income and expenses in the calculator above for an exact figure, and remember to add any pension contributions or student-loan repayments separately.

Income Tax Bands

  • £0 – £12,570 — Personal Allowance (0%)
  • £12,571 – £50,270 — Basic Rate (20%)
  • £50,271 – £125,140 — Higher Rate (40%)
  • £125,141+ — Additional Rate (45%)

Note: Personal Allowance is reduced by £1 for every £2 of income above £100,000, removed entirely at £125,140.

Class 4 National Insurance (2026/27)

  • £0 – £12,570 — 0%
  • £12,571 – £50,270 — 6%
  • £50,271+ — 2%

Class 2 National Insurance

Mandatory Class 2 NI was abolished for the 2024/25 tax year onwards. You may still voluntarily pay Class 2 (£3.45/week, ~£179.40/year for 2026/27) if your profits are below £6,725 and you want to protect your State Pension entitlement and certain benefits.

Common Allowable Expenses

  • Office costs (stationery, phone, broadband proportion)
  • Business travel (45p/mile first 10,000 miles, 25p thereafter)
  • Marketing, professional subscriptions, training in your trade
  • Working from home (simplified flat rate: £10–£26/month depending on hours)
  • Accountancy and legal fees
  • Equipment under £1,000 (full deduction) or capital allowances above

Payments on Account

If your tax bill exceeds £1,000, HMRC requires you to pay half of next year's estimated bill by 31 January, and the other half by 31 July. New self-employed people are exempt for their first year only.

Registering and Key Self Assessment Deadlines

If you started self-employment, you must register with HMRC by 5 October after the end of your first tax year. The Self Assessment cycle then runs to fixed dates:

  • 5 October — register for Self Assessment (first year only).
  • 31 October — deadline for paper tax returns.
  • 31 January — deadline for online returns, your balancing payment, and the first payment on account.
  • 31 July — second payment on account.

Missing the 31 January online deadline triggers an automatic £100 penalty, with further penalties and interest after three, six and twelve months.

How to Reduce Your Self-Employed Tax Bill (Legally)

  • Claim every allowable expense — under-claiming is the most common mistake. Keep receipts for travel, equipment, home-office use and professional fees.
  • Pay into a pension — personal pension contributions extend your basic-rate band and can reclaim higher-rate relief, one of the biggest levers for higher earners.
  • Time your equipment purchases to use the Annual Investment Allowance in a high-profit year.
  • Consider incorporating once profits are high — model the alternative with our Dividend Tax Calculator and, if you contract through an agency, the Contractor IR35 Calculator.

Sole Trader vs Limited Company: When to Switch

Below roughly £30,000 profit, a sole trader is usually simpler and no less tax-efficient. Between £30,000 and £60,000 it is close to a toss-up once accountancy costs are factored in. Above ~£60,000, a limited company taking salary plus dividends often saves tax — compare the two routes with the Dividend Tax Calculator, check an employed-equivalent figure in the Salary After Tax Calculator, and see headline bands in the Income Tax Calculator. If you sell business assets or shares, the Capital Gains Tax Calculator covers the disposal side.

Frequently Asked Questions

What tax do self-employed people pay in the UK 2026/27? Three taxes: Income Tax on profits (20% basic, 40% higher, 45% additional band), Class 4 NI on profits between £12,570 and £50,270 at 6%, plus 2% above £50,270. Class 2 NI was abolished in April 2024 — most self-employed people no longer pay it unless voluntarily contributing for state pension credits.

What is the personal allowance for 2026/27? £12,570 — the same since 2021/22 (frozen). You don't pay income tax on profits below this. If your total income (including employment) exceeds £100,000, your personal allowance reduces by £1 for every £2 over, disappearing entirely at £125,140.

How are profits calculated? Profit = revenue minus allowable business expenses. Allowable expenses include: business travel, office supplies, professional fees, training relevant to your trade, business use of home (simplified £4–£26/month), business insurance, marketing, accountancy fees, and capital allowances on equipment.

When do I pay self-employed tax? 31 January following the tax year end (e.g., 31 Jan 2027 for 2025/26). You also pay 'payments on account' — half of your previous year's tax due by 31 Jan and the other half by 31 July, on top of any balancing payment. First-time filers don't pay payments on account in year one.

Should I register as a sole trader or limited company? Profits under £30K typically work best as sole trader (simpler, no corporation tax). Profits £30–£60K it's roughly a toss-up. Above £60K a limited company usually saves tax via dividends, but with more admin and accounting cost. See our Dividend Tax calculator to compare.

Do I need to register for VAT as a sole trader? You must register once your taxable turnover exceeds £90,000 in any rolling 12-month period (2026/27 threshold), or voluntarily below that to reclaim VAT on purchases. VAT is separate from Income Tax and Self Assessment — once registered you charge VAT on sales and submit (usually quarterly) VAT returns.

What is Making Tax Digital for Income Tax, and does it affect me? From April 2026, sole traders and landlords with qualifying income over £50,000 must keep digital records and send quarterly updates to HMRC using compatible software. The threshold drops to £30,000 from April 2027 and £20,000 from April 2028. Keeping clean digital records now makes the transition far easier.

Can I claim my car, home office and phone? Yes — the business proportion only. Use simplified mileage (45p/mile for the first 10,000 miles, 25p after) or actual running costs for a vehicle, HMRC's flat home-working rate (£10–£26/month by hours) or a share of household bills, and the business-use percentage of phone and broadband.

What records do I need to keep, and for how long? Keep records of all income and expenses, plus invoices, receipts and bank statements, for at least five years after the 31 January Self Assessment deadline. Good records make MTD quarterly reporting easier and protect you if HMRC opens an enquiry.

Last reviewed: June 2026. Calculations use the 2026/27 UK tax year, with rates published by HMRC / gov.uk. These figures are estimates — confirm your position with HMRC or a qualified accountant before acting.

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Important Note: This is a planning estimate using standard 2026/27 HMRC rates. Specific circumstances (student loans, pension contributions, multiple income sources, marriage allowance) may change your final tax. Speak to a qualified accountant for personal advice.

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