If you are a sole trader, the tax return you send HMRC this winter covers the 2025/26 tax year: 6 April 2025 to 5 April 2026. Most figures you will see quoted now are for 2026/27, and a few of them are different. This page sets out what is due, which numbers to use, and what your 31 January 2027 payment is made of.
Written and reviewed by James Whitfield · Last reviewed 22 October 2026 · Checked against 2026/27 HMRC rates · Editorial standards · Methodology
File your 2025/26 return online by 11:59pm on 31 January 2027 and pay what you owe by the same time.1 On that date you pay the balance of your 2025/26 bill plus, if your bill is £1,000 or more and less than 80% was taxed at source, the first payment on account for 2026/27; the second is due 31 July 2027.2 Income Tax and Class 4 rates are the same in 2025/26 as in 2026/27, but mileage is 45p a mile (not 55p) and voluntary Class 2 is £3.50 a week.345 File a day late and it is £100.6
Related: Self Assessment calculator · Payments on account: dates and SA303 · Can't pay your tax bill in January?
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The tax year runs from 6 April to 5 April. The return due on 31 January 2027 reports your income for 2025/26, the year that ended on 5 April 2026.1 Your accounts for that year, your bank statements from April 2025 to April 2026, and the expenses you paid in that window are what go on it.
The 2026/27 year (6 April 2026 to 5 April 2027) is the one you are trading in now. Its return is not due until 31 January 2028, but its first payment on account is paid this January, based on your 2025/26 bill.2
Most of the numbers you need are the same in both years, which makes the 2026/27 calculators on this site usable for a 2025/26 profit. These are the ones that differ.
| Personal Allowance; basic rate band; higher rate to £125,140 | Same: £12,570; £37,700 |
| Class 4 NI: 6% on £12,570–£50,270, 2% above | Same both years |
| Voluntary Class 2 NI and small profits threshold | £3.50/wk, £6,845 (2026/27: £3.65, £7,105) |
| Simplified mileage, first 10,000 business miles | 45p (2026/27: 55p) |
| Dividend tax: basic / higher / additional | 8.75% / 33.75% / 39.35% (2026/27: 10.75% / 35.75% / 39.35%) |
| Capital Gains Tax: main rates; Business Asset Disposal Relief | 18% / 24%; BADR 14% (2026/27: 18%) |
The mileage change is the one that matters most to tradespeople and drivers. Business miles you drove before 6 April 2026 are claimed at 45p for the first 10,000 and 25p after that; the 55p rate starts with 2026/27.5 If your profit was below £6,845 in 2025/26 you can choose to pay Class 2 at £3.50 a week to protect your State Pension record; at £6,845 or more it is treated as paid.4
In Scotland, the 2025/26 starter and basic bands were narrower than in 2026/27, so use the 2025/26 Scottish bands for this return.3
Priya is a self-employed designer in England with no other income. Her 2024/25 bill was £8,000, so she paid payments on account of £4,000 on 31 January 2026 and £4,000 on 31 July 2026. Her 2025/26 profit was £45,000.
| Income Tax: 20% × (£45,000 − £12,570) | £6,486.00 |
| Class 4 NI: 6% × (£45,000 − £12,570) | £1,945.80 |
| 2025/26 bill | £8,431.80 |
| Less payments on account already made (2 × £4,000) | −£8,000.00 |
| Balancing payment for 2025/26 | £431.80 |
| First payment on account for 2026/27 (50% of £8,431.80) | £4,215.90 |
| Due by 31 January 2027 | £4,647.70 |
| Second payment on account for 2026/27, due 31 July 2027 | £4,215.90 |
Tom started as a self-employed electrician in September 2025, registered by 5 October 2026, and made £22,000 of profit in 2025/26. Because it is his first return, nothing has been paid on account yet, so the whole year falls due in January along with the first payment on account for 2026/27.2
| Income Tax: 20% × (£22,000 − £12,570) | £1,886.00 |
| Class 4 NI: 6% × (£22,000 − £12,570) | £565.80 |
| 2025/26 bill (nothing paid yet) | £2,451.80 |
| First payment on account for 2026/27 (50%) | £1,225.90 |
| Due by 31 January 2027 | £3,677.70 |
| Second payment on account, due 31 July 2027 | £1,225.90 |
Your Government Gateway sign-in and your 10-digit UTR. Your 2025/26 business income and allowable expenses (or the £1,000 trading allowance instead of expenses), and business miles driven between 6 April 2025 and 5 April 2026 if you use the mileage rate. Any P60 or P45 for a job held in 2025/26, bank interest, dividends, rental income, and gross pension contributions or Gift Aid you want relief for.
If you also work for an employer, check whether you can file by 30 December 2026: a bill under £3,000 can then be taken through your tax code in equal instalments over 12 months instead of in one payment, as long as you already pay tax through PAYE and the extra would not more than double your usual tax.7
HMRC states that the current penalties apply to the 2025/26 return due 31 January 2027, including for people who joined Making Tax Digital in April 2026.8 A return filed one day late costs £100. After three months it is £10 a day up to £900; after six and twelve months, a further 5% of the tax due or £300 each time, whichever is greater.6
Late payment is separate: 5% of the tax still unpaid at 30 days, six months and twelve months, plus interest.6 Interest runs at Bank of England base rate plus 4%, 7.75% a year since 9 January 2026, on anything paid late, including payments on account.9 If you cannot pay, file on time anyway and ask HMRC for a payment plan.
HMRC uses your 2025/26 return to check whether Making Tax Digital for Income Tax applies to you from 6 April 2027: it does if your qualifying income for 2025/26 was over £30,000.10 Qualifying income is your total self-employment and property income before expenses (turnover), not your profit, and a salary does not count,12 so a sole trader with £32,000 of sales and £15,000 of profit is likely to be in scope.
The 2025/26 tax year, 6 April 2025 to 5 April 2026. You file the online return and pay the tax due for that year by 11:59pm on 31 January 2027. The paper return deadline was 31 October 2026.
The balancing payment for 2025/26 (your 2025/26 bill minus any payments on account you made in January and July 2026) plus the first payment on account for 2026/27, which is half of your 2025/26 bill. The second payment on account for 2026/27 is due 31 July 2027.
31 January 2027, with the second on 31 July 2027. Each is normally half of your 2025/26 bill. You do not have to make them if that bill was under £1,000 or more than 80% of your tax was collected at source.
Income Tax bands and Class 4 NI (6% on £12,570 to £50,270, 2% above) are the same. Voluntary Class 2 was £3.50 a week with a £6,845 small profits threshold, simplified mileage was 45p a mile for the first 10,000 miles, and dividend tax was 8.75% and 33.75%.
45p a mile for the first 10,000 business miles and 25p after that, for journeys between 6 April 2025 and 5 April 2026. The 55p rate applies from 6 April 2026, so it belongs on the 2026/27 return.
No. GOV.UK says the current penalties apply to the 2025/26 return due 31 January 2027: £100 for filing late, then daily and percentage penalties, and 5% late payment penalties at 30 days, six months and twelve months.
The rates, thresholds and rules in this guide are drawn from the official HMRC and GOV.UK sources below, using the confirmed 2026/27 figures. Each link opens the relevant official page in a new tab.
The sole trader tax calculator turns this guidance into a concrete monthly take-home and tax reserve estimate, based on 2026/27 HMRC rates. Enter taxable profit — not turnover.