| Profit | Income Tax | Class 4 NI | Total | Share of profit | Set aside a month |
|---|---|---|---|---|---|
| £20,000 | £1,486 | £446 | £1,932 | 9.7% | £161 |
| £30,000 | £3,486 | £1,046 | £4,532 | 15.1% | £378 |
| £35,000 | £4,486 | £1,346 | £5,832 | 16.7% | £486 |
| £50,000 | £7,486 | £2,246 | £9,732 | 19.5% | £811 |
| £60,000 | £11,432 | £2,457 | £13,889 | 23.1% | £1,157 |
| £75,000 | £17,432 | £2,757 | £20,189 | 26.9% | £1,682 |
| £100,000 | £27,432 | £3,257 | £30,689 | 30.7% | £2,557 |
PayMetric Labs' own modelled estimate on 2026/27 rates for England, Wales and Northern Ireland, with self-employment as your only income and no pension contributions. Scotland has its own Income Tax bands.
Sole trader tax payment planner: what you owe on 31 January and 31 July
The tax is only half the question; the other half is when HMRC wants it. Enter last year's profit and what you expect this year, and the planner lays out your next three payment dates.
Income minus allowable expenses, 6 April 2025 to 5 April 2026.
Your best guess for the current tax year.
31 January 2027
£8,748
- Your 2025/26 bill£5,832
- First payment on account for 2026/27£2,916
File your 2025/26 return online by this date.
31 July 2027
£2,916
- Second payment on account for 2026/27£2,916
Half of your 2025/26 bill again.
31 January 2028
£4,866
- Balancing payment for 2026/27£1,300
- First payment on account for 2027/28£3,566
File your 2026/27 return by this date.
To cover 2026/27 itself, set aside each month
£594
That is your whole £7,132 bill for 2026/27 spread over twelve months. Your 2025/26 bill is £5,832.
PayMetric Labs' own modelled estimate: Income Tax and Class 4 National Insurance on sole trader profit for England, Wales and Northern Ireland, on the rates for 2025/26 and 2026/27 (which are the same). Payments on account follow GOV.UK's rule of half the previous bill, unless that bill was under £1,000. It ignores PAYE income, student loan repayments, Capital Gains Tax and Scottish rates, and the rule that waives payments on account when 80% of your tax was paid at source.
How sole trader tax is worked out in 2026/27
1. Start with profit. Profit is everything you invoiced in the tax year (6 April 2026 to 5 April 2027) minus allowable business expenses: equipment, software, a share of phone and broadband, travel to clients, professional fees. If your expenses are tiny you can deduct the £1,000 trading allowance instead, but not both.
2. Income Tax on profit works exactly like it does on a salary, using the 2026/27 bands: the first £12,570 is tax free, then 20% to £50,270, 40% to £125,140 and 45% above. Above £100,000 you lose £1 of Personal Allowance for every £2, which creates the effective 60% tax trap.
3. Class 4 National Insurance is the self-employed version of the NI an employee pays: 6% on profits from £12,570 to £50,270 and 2% above. It is collected through your Self Assessment return alongside Income Tax.
4. Class 2 is no longer charged. With profits of £7,105 or more you get a qualifying year for your State Pension without paying anything. Below that, it is worth considering voluntary Class 2 at £3.65 a week, a cheap way to keep your National Insurance record complete.
Compared with an employee on the same money, a sole trader pays less National Insurance (6% rather than 8% in the main band) but has no employer pension, sick pay or holiday pay, and pays tax in arrears. That trade-off is why freelancers need a higher rate than the salary they are replacing: our freelance day rate guide works through it.
Payments on account: why your first tax bill looks like 150%
Payments on account are advance payments towards next year's bill, each worth half of last year's Income Tax and Class 4 NI. They are due on 31 January and 31 July. You don't make them if last year's bill was under £1,000, or if more than 80% of your tax was already taken at source, for example through a PAYE job.
The shock comes in the first year. Say your 2025/26 profit was £35,000 and you had never filed before. Your bill is £5,832, but on 31 January 2027 you pay £8,748: the £5,832 bill plus a first payment on account of £2,916. Another £2,916 follows on 31 July 2027. If 2026/27 profit rises to £40,000, a £1,300 balancing payment and a £3,566 payment on account fall due on 31 January 2028.
From then on the cycle settles into two similar payments a year. If your profit drops, you can ask HMRC to reduce your payments on account so you aren't paying for income you won't earn; if you reduce them too far you pay interest on the shortfall.
Self Assessment deadlines for 2026/27
| Date | What's due |
|---|---|
| 31 January 2027 | File your 2025/26 return online. Pay the 2025/26 balance and your first payment on account for 2026/27. |
| 31 July 2027 | Second payment on account for 2026/27. |
| 5 October 2027 | Register for Self Assessment if you started trading during 2026/27. |
| 31 October 2027 | Deadline for a paper 2026/27 return. |
| 31 January 2028 | File your 2026/27 return online. Pay the 2026/27 balance and your first payment on account for 2027/28. |
Miss a deadline and the penalties start at once: £100 for a late return even if you owe nothing, then £10 a day after three months up to £900, and further charges at six and twelve months. Paying late adds 5% of the unpaid tax at 30 days, six months and twelve months, plus interest.
Making Tax Digital for sole traders: do you need it yet?
Making Tax Digital for Income Tax means keeping digital records and sending HMRC quarterly updates from compatible software, then a final return. When it applies depends on your qualifying income, which is turnover from self-employment and property before expenses, not profit:
- Over £50,000 in 2024/25: you should already be using it from 6 April 2026.
- Over £30,000 in 2025/26: you start from 6 April 2027.
- Over £20,000 in 2026/27: you start from 6 April 2028.
The tax itself doesn't change; the quarterly updates are about record keeping. They do give you a running view of your bill, which makes the monthly set-aside in the planner easier to keep.
Ways to pay less sole trader tax, legally
- Claim every allowable expense. Software subscriptions, equipment, professional insurance, accountancy fees and a business share of your phone and broadband all reduce profit. At 26% (20% tax plus 6% NI) every £100 of expenses saves about £26.
- Pay into a pension. Personal pension contributions get tax relief at your marginal rate, and they are the main way to keep income under £100,000 and save your Personal Allowance.
- Choose the trading allowance only when it beats your costs. The £1,000 allowance suits a small side business with almost no expenses.
- Watch the higher-rate threshold. Profit above £50,270 is taxed at 42% (40% plus 2% NI), so timing a large purchase or pension payment before 5 April can be worth more.
- Check whether a limited company now makes sense. At higher profits, a company paying salary, dividends and pension can leave more in your pocket, though with more admin. Our salary, dividend or SIPP guide compares the routes.
Work out your exact bill
Enter turnover and expenses, see Income Tax and Class 4 band by band, and what you take home.
Scotland, side businesses and student loans
If you live in Scotland, Income Tax on your profit uses the Scottish bands, which take slightly less on low profits and more on middle and higher ones; National Insurance is the same UK-wide. See Scotland vs England tax for the difference. If you also have a job, compare your overall position with the UK take-home calculator. Student loan repayments on self-employed income are collected through Self Assessment too, but outside payments on account, so they land in the January balancing payment.
The frozen thresholds also matter here: with the allowance and higher-rate threshold fixed until April 2031, rising profits push more of your income into the 40% band each year. Our fiscal drag guide shows how much.
Sole trader tax UK: frequently asked questions
How much tax does a sole trader pay on £30,000 profit?
£4,532 for 2026/27: £3,486 Income Tax and £1,046 Class 4 National Insurance, about 15.1% of profit. That assumes no other income, the standard £12,570 Personal Allowance and rates for England, Wales and Northern Ireland. It is PayMetric Labs' own modelled estimate.
Why is my first Self Assessment bill so big?
Because it usually covers two things at once. You pay the whole of last year's tax, and, if that bill was £1,000 or more, a first payment on account towards this year worth half of it again. So a first bill of £3,000 means paying £4,500 on 31 January, then another £1,500 on 31 July. You have not been overcharged; you have paid part of next year early.
Do sole traders pay National Insurance in 2026/27?
Yes, Class 4: 6% on profits between £12,570 and £50,270 and 2% above. Class 2 is no longer charged. If your profits are £7,105 or more you get a qualifying year for the State Pension for free; below that you can pay voluntary Class 2 at £3.65 a week to protect your record.
I'm employed and self-employed. How does that work?
Your salary is taxed through PAYE as usual, and your self-employed profit goes on a Self Assessment return. The profit is taxed at your marginal rate, which is higher if your salary already uses up the Personal Allowance or the basic rate band. Payments on account are not needed if more than 80% of your total tax was collected at source, which is common when the side business is small.
Is the Making Tax Digital threshold based on profit or turnover?
Turnover. HMRC uses your qualifying income: self-employment and property income before expenses. If that was over £50,000 in 2024/25, you should have started using Making Tax Digital for Income Tax from 6 April 2026. The threshold falls to £30,000 from April 2027 and £20,000 from April 2028.
When do I pay tax on my 2026/27 profits?
Through two payments on account on 31 January 2027 and 31 July 2027, based on your 2025/26 bill, then a balancing payment on 31 January 2028 when you file the 2026/27 return. If you only started trading in 2026/27, nothing is due until 31 January 2028, but then you pay the whole year's tax plus a first payment on account for 2027/28.
Can I use the £1,000 trading allowance instead of expenses?
Yes, but not both. You can deduct either your actual allowable expenses or the £1,000 trading allowance, whichever is higher. If your gross self-employed income is £1,000 or less in the tax year, you don't need to declare it at all. For most full-time sole traders, real expenses are worth more than the allowance.
Sources and method
Checked on GOV.UK on 23 October 2026: Income Tax rates and Personal Allowance, self-employed National Insurance rates for 2026/27, payments on account, Self Assessment penalties, and Making Tax Digital for Income Tax thresholds and qualifying income.
Tax figures and the payment planner are PayMetric Labs' own modelled estimates from our UK self-employed engine: Income Tax and Class 4 NI for England, Wales and Northern Ireland, on rules that were the same in 2025/26 and 2026/27. They exclude PAYE income, student loans, Capital Gains Tax and Scottish rates. This is general information, not personal tax advice.