Take-home profit calculator

What you actually keep after sole trader tax

Once income tax, Class 4 NI and any optional deductions are subtracted from taxable profit, the take-home figure shows what you actually keep. This is the number that should anchor budgeting, mortgage applications, spending decisions and comparisons with employed salary offers.

Note that take-home profit is an annual total. Divide by 12 for a monthly equivalent and use that figure for regular financial planning. The calculator shows both the annual and monthly take-home automatically.

• Compare with employed salary offers: £45,000 of sole trader profit keeps about £649 more than a £45,000 salary after tax, because Class 4 NI (6%) is lower than employee NI (8%), but the salary may come with an employer pension, paid holiday and sick pay.
• Mortgage lenders typically use 2–3 years of net profit figures from SA302 returns, not the after-tax take-home.
• If take-home feels low, check whether adding pension contributions improves the income tax position.

Rates checked against Budget 2026 Annex A on 30 October 2026. Written and reviewed by James Whitfield against current GOV.UK and HMRC guidance. Estimates for planning only — not tax, accounting or financial advice.

Profit is not the same as the cash you can draw

Your tax bill is based on profit, but what you can safely take out of the business depends on cash, and the two drift apart. Under the cash basis, the default for sole traders since 2024/25, profit is broadly the money you received in the tax year minus the allowable costs you paid. An invoice your client pays on 10 April belongs to the next tax year. Under traditional accounting the same invoice counts when you issue it, even if it has not been paid.

As a sole trader you do not pay yourself a salary. Money you move from the business account to your own is drawings, and drawings are not an expense: they do not reduce your profit or your tax. Take-home profit is the most you can draw over the year without dipping into the money you owe HMRC.

Profit, drawings and cash, worked through for 2026/27

Drawing more than your take-home profit

Profit of £34,000 means £4,286 Income Tax and £1,285.80 Class 4 NI, leaving take-home profit of £28,428.20, or £2,369.02 a month. Draw a round £2,500 a month and you take £30,000 over the year, £1,571.80 more than you can afford. That shortfall is tax money, and it shows up when the bill arrives in January.

Buying a van for cash

Before buying anything, profit is £46,000 and the bill £8,691.80. A £12,000 van bought outright and used for the business can usually be deducted in full in the year you buy it, as a cash-basis expense or through the Annual Investment Allowance. Profit falls to £34,000 and the bill to £5,571.80, saving £3,120.00. But £12,000 has left the bank, so the van costs you £8,880.00 in cash after tax, and your drawings have less to come from.

A late-paying client at the year end

On the cash basis, a £5,000 invoice issued in March and paid in April is not 2026/27 profit. It lowers this year's bill but raises next year's, so put its tax aside when the money arrives rather than spending it as a windfall.

Every figure here comes from the calculator above, using 2026/27 rates. Estimates for planning only, not tax advice.

Profit and cash pitfalls

• Treating drawings as a cost. Taking money out never reduces your profit; only allowable business costs do.
• Paying personal costs from the business account. That is fine, but they are drawings, and mixing them in makes your records harder to keep straight.
• Spending VAT you have collected. If you are VAT-registered, it belongs to HMRC.
• Forgetting payments on account. In your first year with a bill of £1,000 or more, January can ask for up to 150% of the year's tax, so draw less before then.

Take-home profit — questions