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.
Updated 2026/27 · SoleTraderTaxCalculator.co.uk · Editorial standards · Methodology
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.
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. 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.
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. 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.
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.
Scotland sets its own Income Tax bands. For 2026/27 the starter rate of 19% applies from £12,571 to £14,876, the basic rate of 20% from £14,877 to £26,561, the intermediate rate of 21% from £26,562 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.
The practical effect is that Scottish sole traders on middle 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.
£30,000 profit (England/Wales/NI): Income Tax is 20% on £17,430 = £3,486, and Class 4 NI is 6% on £17,430 = £1,046. Total tax and NI is £4,532, leaving take-home of about £25,468.
£50,000 profit: Income Tax is 20% on £37,430 = £7,486, and Class 4 NI is 6% on £37,430 = £2,246. Total is £9,732, leaving take-home of about £40,268.
£60,000 profit: Income Tax is £7,540 at basic rate plus £3,892 at 40% = £11,432, and Class 4 NI is £2,262 at 6% plus £195 at 2% = £2,457. Total is £13,889, leaving take-home of about £46,111. These figures assume no student loan, pension or other income — enter your own numbers in the calculator for an exact estimate.
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.
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.
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.
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.
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.
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