Sole Trader Tax Calculator (UK)
As a UK sole trader you pay Income Tax plus Class 2 and Class 4 National Insurance on your business profit. Enter your annual profit (after expenses) to see your 2026/27 tax bill — and the threshold where a limited company starts to save you money.
Read more
Sole trader is the simplest UK business structure — no Companies House filings, no Corporation Tax return, and your profit is yours immediately. But you pay tax on every pound earned, with no shielding via a separate legal entity.
Above around £40,000–£50,000 of annual profit, the combination of Corporation Tax (19% small profits rate) plus dividend tax can still beat sole-trader rates — though the April 2026 dividend rate rise to 10.75%/35.75% narrows the gap. Below that, sole trader is usually cheaper and far less hassle.
Self-Employed Tax Calculator
Your net profit after business expenses
Rates updated for 6 April 2026
Employment income, rental income, etc.
Personal pension contributions get tax relief
What this means for your business setup
On a £40,000 profit you're paying roughly £7,130 in total tax (about 17.8% effective) — £5,486 Income Tax plus £1,646 Class 4 NI, leaving around £32,870 net. Class 2 NI isn't charged at this level: profits of £7,105+ are treated as having paid it. Crucially, you also have to fund Self Assessment payments on account, so a £7,130 bill arrives as ~£10,700 in January and another £3,565 in July.
Set aside 30–35% of every invoice from day one into a separate tax account. Once profits push above £40,000, run the same number through the Limited Company calculator to see if incorporating would save you money.
Frequently Asked Questions
What's Next?
Not sure which calculators you need?
Answer 7 quick questions and we'll show you exactly which UK costs apply to your situation. Takes under 60 seconds.