Self-Employed Tax Calculator (UK Sole Trader)
Income tax plus Class 2 and Class 4 national insurance on UK sole trader profits after allowable expenses.
About your business year
What you'll owe
- Taxable profit
- £52,000
- Personal allowance
- £12,570
- Income tax
- £8,232
- Class 2 NI
- £0
- Class 4 NI
- £2,297
- Student loan
- £0
- Take-home80%
- Income tax16%
- Class 4 NI4%
Estimates only, based on published HMRC rates. Not financial advice.
Sole traders pay income tax and national insurance on profit, not on turnover. Understanding the difference, and the payment schedule, is most of what makes self-assessment manageable.
How to use it
- 1Enter your turnover and allowable business expenses.
- 2Set the tax year and region.
- 3Read the income tax, Class 2 and Class 4 breakdown on your profit.
Profit, not turnover
Your tax is calculated on turnover minus allowable business expenses. Allowable means wholly and exclusively for the business: stock, software, professional subscriptions, accountancy fees, business insurance, travel that isn't ordinary commuting, and a proportion of home costs if you work from home.
Keeping expenses recorded as you go rather than reconstructing them in January is the single highest-value habit in self-employment. Unclaimed expenses are simply tax paid unnecessarily.
Class 2 and Class 4 national insurance
Class 4 is the main one: a percentage of profits above a lower threshold, with a reduced rate on profits above the upper threshold. It's calculated alongside income tax in your self-assessment.
Class 2 is the flat weekly contribution that builds entitlement to the State Pension and certain benefits. It's no longer compulsory for most profit levels, but sole traders with low profits can still pay it voluntarily to protect their contribution record, usually a good deal given how little it costs relative to a qualifying year.
Payments on account catch people out
If your self-assessment bill is over £1,000, HMRC asks for payments on account: two advance instalments towards next year's tax, each half of this year's bill. In your first profitable year that means the January payment can be 150% of what you expected, the balancing payment for the year just gone, plus the first instalment for the next.
Plan for it by setting money aside monthly. A common rule of thumb is 30% of profit into a separate account, adjusted up if you're a higher-rate taxpayer. Also watch the VAT registration threshold as turnover grows; it's based on rolling 12-month turnover, not your accounting year.
Common questions
- How much tax will I pay as a sole trader?
- Income tax at the standard bands on your profit above the personal allowance, plus Class 4 national insurance on profits above its threshold. Enter your figures above for a specific estimate.
- What counts as an allowable expense?
- Costs incurred wholly and exclusively for the business, stock, software, insurance, professional fees, business travel, and a reasonable share of home working costs. Personal spending and ordinary commuting don't qualify.
- What are payments on account?
- Advance instalments towards next year's tax, due when your bill exceeds £1,000. Each is half of the previous year's liability, payable in January and July.
- Do I still need to pay Class 2 national insurance?
- It's no longer mandatory at most profit levels, but paying voluntarily protects your State Pension record when profits are low. It's cheap relative to the qualifying year it buys.
- Should I set up a limited company instead?
- It can be more tax-efficient above a certain profit level, but brings filing requirements, accountancy costs and different rules. Compare the two positions with the salary and dividend calculator, and take advice before switching.