UK self-employed & sole trader tax calculator 2026
A UK sole trader in 2026 pays Income Tax on profits above the £12,570 personal allowance: 20% to £50,270, 40% to £125,140, then 45%. On top, Class 4 National Insurance is charged at 6% on profits between £12,570 and £50,270 (2% above that).
This calculator estimates the total tax bill for a UK sole trader in 2026, combining Income Tax and Class 4 National Insurance contributions on your self-employed profits.
Calculate estimate
Result
United Kingdom Sole trader tax rates 2026
| Band or item | Rate |
|---|---|
| Up to £12,570 | 0% (tax free) |
| £12,570 to £50,270 | 20% |
| £50,270 to £125,140 | 40% |
| Over £125,140 | 45% |
| Social contributions (Class 4 National Insurance) | 6% |
Source: www.gov.uk
How is a UK sole trader taxed in 2026?
As a sole trader you are self-employed, so you pay tax on your business profit (income minus allowable expenses), not on turnover. That profit is added to your other income and taxed through Self Assessment.
Income Tax uses a progressive band structure. The first £12,570 is your personal allowance and is taxed at 0%. Profit between £12,570 and £50,270 is taxed at the basic rate of 20%. Profit from £50,270 up to £125,140 is taxed at the higher rate of 40%, and anything above £125,140 is taxed at the additional rate of 45%. Note that the personal allowance is gradually withdrawn once income passes £100,000.
Class 4 National Insurance for the self-employed
On top of Income Tax, sole traders pay Class 4 National Insurance contributions (NIC) on their profits. The main rate is 6%, applied to profit in the band from £12,570 up to £50,270. Profit above £50,270 attracts a reduced Class 4 rate of 2%.
Because both Income Tax and Class 4 NIC start at the same £12,570 threshold, profit inside the basic-rate band effectively carries a combined marginal charge of 26% (20% + 6%). This calculator uses the 6% main Class 4 rate as the default contribution setting.
A worked example on £40,000 profit
Suppose your sole trader profit for 2026 is £40,000.
- The first £12,570 falls in the personal allowance and is taxed at 0%.
- The remaining £27,430 sits in the basic-rate band, so Income Tax is £27,430 × 20% = £5,486.
- Class 4 NIC applies to the same £27,430 at 6%, giving £27,430 × 6% = £1,645.80.
Your total charge is £5,486 + £1,645.80 = £7,131.80, leaving take-home profit of about £32,868.20. That is an effective rate of roughly 17.8% on the full £40,000, even though the marginal rate on the top of your profit is 26%.
Frequently asked questions
How much tax does a UK sole trader pay in 2026?
A sole trader pays Income Tax at 0% up to £12,570, 20% from £12,570 to £50,270, 40% from £50,270 to £125,140, and 45% above that, plus Class 4 National Insurance of 6% on profits between £12,570 and £50,270 (2% above).
What is the personal allowance for a sole trader?
The personal allowance is £12,570 for 2026, meaning the first £12,570 of profit is taxed at 0%. The allowance is tapered away once income exceeds £100,000.
How much is Class 4 National Insurance in 2026?
Class 4 NIC is charged at 6% on profits between £12,570 and £50,270, and at 2% on profits above £50,270. Profit below £12,570 pays no Class 4 NIC.
When does a sole trader start paying 40% tax?
The 40% higher rate applies to profit above £50,270. Below that, in the basic-rate band from £12,570 to £50,270, the rate is 20%.
What is the combined marginal rate in the basic-rate band?
Inside the basic-rate band (£12,570 to £50,270), Income Tax of 20% and Class 4 NIC of 6% combine to a marginal rate of 26% on each extra pound of profit.
Do sole traders pay tax on turnover or profit?
Sole traders are taxed on profit, which is income minus allowable business expenses, not on total turnover. All tax and Class 4 NIC apply only to profit above the £12,570 allowance.
Official sources
- HM Revenue & Customs (HMRC) — Corporate & personal income tax