Sole trader tax rates and thresholds 2026/27
Rates from GOV.UK: Income Tax rates and Personal Allowances and Self-employed National Insurance rates.
Every rate, band and threshold a UK sole trader needs for the 2026/27 tax year (6 April 2026 to 5 April 2027), in one place. Income Tax figures are for England, Wales and Northern Ireland. National Insurance is the same across the UK. If you want the full explanation of how these fit together, read how self-employment tax works. If you just want your own bill, use the self-employed tax calculator.
Income Tax bands 2026/27
Sole traders pay Income Tax on their profit (income minus allowable expenses), using the same bands as employees. Any other income, such as a salary, uses up the bands first.
| Band | Taxable profit | Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 to £50,270 | 20% |
| Higher rate | £50,271 to £125,140 | 40% |
| Additional rate | Over £125,140 | 45% |
The Personal Allowance shrinks by £1 for every £2 of income over £100,000, and is gone completely at £125,140. These bands are frozen at the same level until April 2028.
Scotland has its own Income Tax bands, with more rates (starter, basic, intermediate, higher, advanced and top). If you live in Scotland, use the Scottish rates on GOV.UK for Income Tax. The National Insurance figures below still apply.
National Insurance rates 2026/27
| Class | Profit | Rate |
|---|---|---|
| Class 4 | Up to £12,570 (Lower Profits Limit) | 0% |
| Class 4 | £12,570 to £50,270 (Upper Profits Limit) | 6% |
| Class 4 | Over £50,270 | 2% |
| Class 2 | £7,105 or more (Small Profits Threshold) | Nothing to pay; treated as paid |
| Class 2 (voluntary) | Under £7,105 | £3.65 a week, if you choose |
Compulsory Class 2 payments ended in April 2024. If your profit is at least £7,105, you get the year's State Pension credit without paying anything. Below that, paying £3.65 a week (about £190 a year) voluntarily is usually a very cheap way to protect your State Pension.
Your real tax rate: Income Tax and NI combined
What matters when you earn an extra pound is the combined rate. For a sole trader with no other income:
| Profit | Income Tax | Class 4 NI | Tax on each extra £1 |
|---|---|---|---|
| Up to £12,570 | 0% | 0% | 0% |
| £12,570 to £50,270 | 20% | 6% | 26% |
| £50,270 to £100,000 | 40% | 2% | 42% |
| £100,000 to £125,140 | 60% (40% plus losing the allowance) | 2% | 62% |
| Over £125,140 | 45% | 2% | 47% |
The 62% band between £100,000 and £125,140 is the one to plan around. Pension contributions reduce the income used for the taper, so paying into a pension in that band can win back the lost allowance.
How much tax at different profit levels
Total Income Tax and Class 4 NI for 2026/27, for a sole trader in England with no other income, no student loan and no pension contributions:
| Profit | Income Tax | Class 4 NI | Total tax | Take-home | Effective rate |
|---|---|---|---|---|---|
| £15,000 | £486 | £146 | £632 | £14,368 | 4.2% |
| £20,000 | £1,486 | £446 | £1,932 | £18,068 | 9.7% |
| £30,000 | £3,486 | £1,046 | £4,532 | £25,468 | 15.1% |
| £40,000 | £5,486 | £1,646 | £7,132 | £32,868 | 17.8% |
| £50,270 | £7,540 | £2,262 | £9,802 | £40,468 | 19.5% |
| £60,000 | £11,432 | £2,457 | £13,889 | £46,111 | 23.1% |
| £75,000 | £17,432 | £2,757 | £20,189 | £54,811 | 26.9% |
| £100,000 | £27,432 | £3,257 | £30,689 | £69,311 | 30.7% |
| £150,000 | £53,703 | £4,257 | £57,960 | £92,040 | 38.6% |
A useful rule of thumb from this table: a basic-rate sole trader should set aside roughly 20–25% of profit for tax, and a higher-rate one 30% or more.
Work out your own bill
Self-Employed Tax Calculator (UK)
Enter your income and expenses to see your profit, Income Tax, Class 4 NI, student loan repayments, take-home pay and any Payments on Account.
Open the calculator →Other thresholds sole traders need to know
| Threshold | 2026/27 | What it means |
|---|---|---|
| Trading allowance | £1,000 | Income (not profit) under this doesn't need declaring. Above it, you can deduct £1,000 instead of your actual expenses. |
| Registering for Self Assessment | Over £1,000 of income | Register with HMRC by 5 October after the end of the tax year you started. |
| Payments on Account | Tax bill over £1,000 | Two advance payments towards next year, each 50% of this year's bill. Not needed if more than 80% of your tax is already collected at source (for example through PAYE). |
| VAT registration | £90,000 turnover | You must register if your VAT-taxable turnover over the last 12 months goes above this. See how to work out VAT. |
| Making Tax Digital for Income Tax | Over £50,000 | From April 2026, sole traders and landlords with qualifying income over £50,000 must keep digital records and send quarterly updates. This falls to £30,000 from April 2027 and £20,000 from April 2028. |
| High Income Child Benefit Charge | £60,000 to £80,000 | If you or your partner claim Child Benefit, it is gradually clawed back as your income rises through this range. |
Key dates for the 2026/27 tax year
- 5 April 2027: the tax year ends.
- 5 October 2027: deadline to register for Self Assessment, if 2026/27 was your first year.
- 31 October 2027: deadline for a paper tax return.
- 31 January 2028: deadline for the online tax return, and to pay any tax still owed for 2026/27 plus the first Payment on Account for 2027/28.
- 31 July 2028: second Payment on Account for 2027/28.
Missing the 31 January filing deadline brings an automatic £100 penalty, even if you have no tax to pay.
Common mistakes
Using the rates on income, not profit. Tax is charged on profit after allowable expenses. Keeping good records of costs is the simplest way to pay less.
Forgetting your other income. If you also have a job, your salary uses the Personal Allowance and basic-rate band first, so more of your self-employed profit may be taxed at 40%.
Not saving for Payments on Account. In your second year, the January bill can be one and a half years' tax at once. The self-employment tax guide explains why.
Assuming Scottish rates are the same. They aren't. Scottish taxpayers pay different Income Tax rates, but the same National Insurance.
Related guides and calculators
- How self-employment tax works: expenses, Payments on Account and a full worked example.
- How much tax does a limited company pay?: whether going limited would save you tax.
- UK take-home pay explained: the same bands for employees.
- Is my side hustle actually profitable?: the true hourly rate after tax.
- Self-employed tax calculator and salary calculator.
Frequently asked questions
What are the sole trader tax rates for 2026/27?
Sole traders pay Income Tax on profit at 0% up to £12,570, 20% from £12,571 to £50,270, 40% from £50,271 to £125,140 and 45% above that (England, Wales and Northern Ireland). They also pay Class 4 National Insurance at 6% on profit between £12,570 and £50,270, and 2% above £50,270.
How much tax does a sole trader pay on £30,000 profit?
For 2026/27, with no other income, a sole trader with £30,000 profit pays £3,486 Income Tax and £1,046 Class 4 National Insurance, a total of £4,532. That leaves £25,468 take-home, an effective rate of about 15%.
What is the tax-free threshold for a sole trader?
There are two. The first £1,000 of self-employed income is covered by the trading allowance and doesn't need declaring if it's your only self-employed income. Above that, profit up to £12,570 is covered by the Personal Allowance, so no Income Tax or Class 4 NI is due on it, provided you have no other income using the allowance.
What percentage of my income should I save for tax as a sole trader?
A common guide is 20–25% of profit if you're a basic-rate taxpayer, and 30% or more if your profit goes above £50,270. In your second year of trading, save extra for Payments on Account, which add half of next year's bill to the January payment.
Do sole traders pay Class 2 National Insurance in 2026/27?
No compulsory payments. If your profit is £7,105 or more, you're treated as having paid Class 2 and get the year's State Pension credit for free. Below £7,105 you can choose to pay voluntarily at £3.65 a week.
Are sole trader tax rates different in Scotland?
Income Tax rates and bands are different for Scottish taxpayers, who have more bands, including starter and intermediate rates. National Insurance rates and thresholds are the same across the whole UK.