Sole trader tax rates 2026/27
Sole traders pay Income Tax and Class 4 National Insurance on taxable profit — turnover minus allowable business expenses. This page sets out the exact 2026/27 rates and thresholds so you can see what applies to each slice of your profit, including the different bands that apply to Scottish taxpayers.
Written and reviewed by James Whitfield · Last reviewed 30 October 2026 · Checked against 2026/27 HMRC rates · Editorial standards · Methodology
Contents ▾
For 2026/27 a sole trader's first £12,570 of profit is tax-free (Personal Allowance). Income Tax is then 20% up to £50,270, 40% up to £125,140 and 45% above. On top, Class 4 National Insurance is 6% on profit between £12,570 and £50,270, then 2% above £50,270. Class 2 NI is no longer payable for most sole traders. Scottish taxpayers use different Income Tax bands, but Class 4 NI is the same UK-wide.
- →Personal Allowance: £12,570 (tax-free profit).
- →Income Tax: 20% (£12,570–£50,270), 40% (£50,270–£125,140), 45% (over £125,140).
- →Class 4 NI: 6% (£12,570–£50,270), then 2% above.
- →Personal Allowance tapers by £1 for every £2 of profit over £100,000.
Related: Pension tax relief for sole traders
- The first £12,570 of profit is tax-free under the Personal Allowance.1
- Income Tax: 20% to £50,270, 40% to £125,140, 45% above.1
- Class 4 NI: 6% from £12,570 to £50,270, then 2% above.2
- £40,000 profit → £7,132 tax and NI → £32,868 take-home.12
- Scotland uses different Income Tax bands; Class 4 NI is the same UK-wide.2
Key figures
- Income Tax is 20% from £12,570 to £50,270, 40% to £125,140 and 45% above, for 2026/27 and 2027/28 (rest of the UK). Budget 2026 Annex A
- Class 4 National Insurance is 6% on profits from £12,570 to £50,270 and 2% above. Budget 2026 Annex A
- With profits of £7,105 or more, Class 2 National Insurance is treated as paid; below that it is voluntary, at £3.65 a week in 2026/27. GOV.UK
Checked 30 October 2026.
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How much tax does a sole trader pay? 2026/27 table
Total Income Tax and Class 4 National Insurance at eleven profit levels, worked out by our calculator for 2026/27 (England, Wales and Northern Ireland, no other income, student loan or pension).12 The monthly figure is what to put aside to cover the year's bill.
| £15,000 profit: Income Tax £486 + Class 4 NI £146 | £632 (4.2%); put aside £53 a month |
| £20,000 profit: Income Tax £1,486 + Class 4 NI £446 | £1,932 (9.7%); put aside £161 a month |
| £25,000 profit: Income Tax £2,486 + Class 4 NI £746 | £3,232 (12.9%); put aside £269 a month |
| £30,000 profit: Income Tax £3,486 + Class 4 NI £1,046 | £4,532 (15.1%); put aside £378 a month |
| £40,000 profit: Income Tax £5,486 + Class 4 NI £1,646 | £7,132 (17.8%); put aside £594 a month |
| £50,000 profit: Income Tax £7,486 + Class 4 NI £2,246 | £9,732 (19.5%); put aside £811 a month |
| £60,000 profit: Income Tax £11,432 + Class 4 NI £2,457 | £13,889 (23.1%); put aside £1,157 a month |
| £75,000 profit: Income Tax £17,432 + Class 4 NI £2,757 | £20,189 (26.9%); put aside £1,682 a month |
| £100,000 profit: Income Tax £27,432 + Class 4 NI £3,257 | £30,689 (30.7%); put aside £2,557 a month |
| £125,000 profit: Income Tax £42,432 + Class 4 NI £3,757 | £46,189 (37.0%); put aside £3,849 a month |
| £150,000 profit: Income Tax £53,703 + Class 4 NI £4,257 | £57,960 (38.6%); put aside £4,830 a month |
Income Tax rates for sole traders (England, Wales & NI)
Sole traders pay Income Tax at the same rates as employed people, but on taxable profit rather than salary. For 2026/27, the first £12,570 of profit is covered by the Personal Allowance and is tax-free. Profit above that is taxed in bands.
The basic rate of 20% applies to taxable profit from £12,570 to £50,270. The higher rate of 40% applies from £50,270 to £125,140. The additional rate of 45% applies to profit above £125,140.1 These thresholds cover taxpayers in England, Wales and Northern Ireland; Scottish taxpayers use different bands (covered below).
Only the slice of profit within each band is taxed at that band's rate. A sole trader with £60,000 profit does not pay 40% on all of it — they pay 20% on the profit between £12,570 and £50,270, and 40% only on the £9,730 that falls above £50,270.
Class 4 National Insurance rates
On top of Income Tax, sole traders pay Class 4 National Insurance on profit. For 2026/27 the rate is 6% on profit between £12,570 and £50,270, and 2% on profit above £50,270.2 Class 4 NI is paid through Self Assessment alongside Income Tax.
Class 2 National Insurance, which used to be a flat weekly charge, is effectively no longer payable for most sole traders — those with profits above the small profits threshold are treated as having met their contributions without paying it. Anyone with very low profits can still choose to pay Class 2 voluntarily to protect their State Pension record.
Class 4 NI is set by Westminster and is identical across England, Wales, Scotland and Northern Ireland. Two sole traders on the same profit pay the same Class 4 NI wherever they trade — only the Income Tax layer differs by nation.
Personal Allowance and the £100,000 taper
The £12,570 Personal Allowance is the amount of profit you can earn before Income Tax applies. It is not reduced by Class 4 NI, which starts at the same £12,570 threshold.
Once taxable profit exceeds £100,000, the Personal Allowance is reduced by £1 for every £2 of profit above £100,000. This means the allowance is fully withdrawn once profit reaches £125,140. In the £100,000–£125,140 band, the combination of 40% tax and the disappearing allowance produces an effective marginal rate of around 60% on that slice of profit.
This taper is why sole traders with profits near £100,000 sometimes make a pension contribution — reducing taxable profit back below £100,000 can restore part or all of the Personal Allowance.
Scottish sole trader Income Tax bands 2026/27
Scotland sets its own Income Tax bands. For 2026/27 the starter rate of 19% applies from £12,571 to £16,537, the basic rate of 20% from £16,538 to £29,526, the intermediate rate of 21% from £29,527 to £43,662, the higher rate of 42% from £43,663 to £75,000, the advanced rate of 45% from £75,001 to £125,140, and the top rate of 48% above £125,140.1
The practical effect is that Scottish sole traders on middle-to-higher incomes often pay more Income Tax than those elsewhere in the UK — particularly on profit between £43,663 and £50,270, where Scotland charges 42% while the rest of the UK still charges 20%. At lower profit levels the 19% starter rate can make Scotland marginally cheaper.
Class 4 NI is unchanged in Scotland: 6% then 2% on the same thresholds. To apply Scottish bands, select Scotland in the calculator's region selector.
Worked examples at common profit levels (2026/27)
Here is how the rates land at three common profit levels for England, Wales and Northern Ireland. Each row is total Income Tax plus Class 4 NI, and the take-home that leaves.
| £30,000 profit — tax £4,532, take-home £25,468 | 15.1% effective |
| £50,000 profit — tax £9,732, take-home £40,268 | 19.5% effective |
| £60,000 profit — tax £13,889, take-home £46,111 | 23.1% effective |
Frequently asked questions
What are the sole trader tax rates for 2026/27?+
Income Tax is 20% on taxable profit from £12,570 to £50,270, 40% from £50,270 to £125,140, and 45% above £125,140. Class 4 National Insurance is 6% on profit from £12,570 to £50,270 and 2% above. The first £12,570 of profit is tax-free under the Personal Allowance.
How much can a sole trader earn before paying tax?+
The first £12,570 of taxable profit is covered by the Personal Allowance and is free of Income Tax. Class 4 National Insurance also starts at £12,570. Very small amounts of self-employed income may instead be covered by the £1,000 trading allowance.
Do sole traders still pay Class 2 National Insurance?+
For most sole traders, no. Class 2 NI is effectively no longer payable for those with profits above the small profits threshold — they are treated as having met their contributions without paying it. People with very low profits can still pay Class 2 voluntarily to protect their State Pension record.
Are sole trader tax rates different in Scotland?+
The Income Tax rates are different — Scotland has six bands ranging from 19% to 48% for 2026/27 — but Class 4 National Insurance is the same across the whole UK at 6% then 2%. Select Scotland in the calculator to apply Scottish bands.
What is the effective tax rate for a sole trader?+
It rises with profit because the rates are progressive. For 2026/27 in England, combined Income Tax and Class 4 NI works out at about 15% of a £30,000 profit, 19.5% at £50,000, and 23% at £60,000. It only climbs toward 30%-plus at much higher profits, and there is an effective 60% band between £100,000 and £125,140 where the Personal Allowance is withdrawn. This is why a flat percentage is a poor guide to what to set aside — use the calculator for your own figure.
Sources & references
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.
- Income Tax rates and Personal Allowances www.gov.uk/income-tax-rates
- Self-employed National Insurance rates www.gov.uk/self-employed-national-insurance-rates
- Self Assessment tax returns www.gov.uk/self-assessment-tax-returns
Estimate your sole trader tax
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.