As a sole trader you pay Income Tax and Class 4 National Insurance on your profits through Self Assessment, not through payroll, so nobody sets the money aside for you. This calculator works out both for the 2026/27 tax year (6 April 2026 to 5 April 2027) in England, Wales and Northern Ireland, including the effect of a salary from a job, and shows what to save and what your payments on account will be.
Figures checked against GOV.UK Income Tax rates and GOV.UK self-employed National Insurance rates. Prices and rules change, so confirm with the official source before relying on them.
How it works
Income Tax: the first £12,570 is covered by the personal allowance. Income above that is taxed at 20% up to £50,270, 40% up to £125,140 and 45% above. The allowance shrinks by £1 for every £2 of income over £100,000, which creates an effective 60% rate between £100,000 and £125,140. These thresholds are frozen until 2030/31.
Class 4 National Insurance is 6% on profits between £12,570 and £50,270 and 2% above. Class 2 is no longer charged; with profits above the small profits threshold you still get National Insurance credits for your State Pension record.
A salary is taxed first through PAYE, so it uses up your allowance and basic-rate band before your profits do. The calculator works out the extra Income Tax your profits add on top. Personal pension contributions extend the basic-rate band by the gross amount, cutting tax for higher-rate payers.
If your Self Assessment bill is £1,000 or more, HMRC usually asks for payments on account toward next year: half by 31 January and half by 31 July. In your first year this can mean paying one and a half years' tax at once, so plan ahead.
A worked example
A sole trader with £45,000 of profit and no other income pays Income Tax of 20% on £32,430 (£6,486) and Class 4 NI of 6% on the same £32,430 (£1,945.80). That's £8,431.80 in total, or 18.7% of profit, leaving £36,568.20. Payments on account would be £4,215.90 each.
Questions people ask
How much tax does a sole trader pay in the UK?
Income Tax on profits above the £12,570 personal allowance (20%, 40% or 45%), plus Class 4 National Insurance at 6% on profits between £12,570 and £50,270 and 2% above. On £30,000 of profit that's about £3,486 of Income Tax and £1,045.80 of NI.
How much should I put aside for tax when self-employed?
The calculator gives an exact percentage for your profit. Basic-rate sole traders often need around 15% to 25% of profit; higher-rate earners more. Remember payments on account in your first years, which can double the first bill.
Do I still pay Class 2 National Insurance?
No. Class 2 contributions stopped being charged from April 2024. If your profits are below the small profits threshold, you can choose to pay voluntary Class 2 to protect your State Pension record.
What are payments on account?
Advance payments toward next year's tax, each normally half of this year's Self Assessment bill, due 31 January and 31 July. They're not required if your bill is under £1,000 or if more than 80% of your tax was already collected at source, such as through PAYE.
Does this work for Scotland?
Only for the National Insurance part. Scottish taxpayers have different Income Tax bands and rates, set by the Scottish Parliament, so the Income Tax figure here will be off for them.