Self-Employed Tax Calculator UK 2026/27
Income tax, Class 2 NI, and Class 4 NI for sole traders. Updated 15 June 2026.
How self-employed tax works in 2026/27
If you are self-employed, whether as a sole trader or a partner in a partnership, your tax situation differs from an employed person in three main ways: how income tax is collected, which National Insurance classes you pay, and how you report your income to HMRC.
Income tax is charged on your trading profits (income minus allowable business expenses) at the same bands as for employed people. The personal allowance of £12,570 applies, and you pay 20% basic rate, 40% higher rate, and 45% additional rate on the same thresholds. In Scotland, the six Scottish bands apply.
The key difference is National Insurance. You do not pay employee Class 1 NI. Instead, you pay Class 2 NI (a flat weekly contribution) and Class 4 NI (a percentage of profits above the Lower Profits Limit). These are collected through your annual Self Assessment tax return rather than through PAYE.
Class 2 National Insurance 2026/27
£0 if profits exceed £7,105 (treated as paid)
Voluntary rate £3.65 per week (£189.80 per year) if profits are below the Small Profits Threshold of £7,105
Class 2 NI was historically a flat-rate weekly contribution, but compulsory Class 2 was abolished from April 2024. If your trading profits are above the Small Profits Threshold (£7,105 for 2026/27), you no longer pay anything: Class 2 is treated as paid automatically and you receive the State Pension credit for free. The flat rate still exists as a voluntary contribution, set at £3.65 per week (£189.80 over the full tax year) for 2026/27, for those whose profits fall below the threshold.
Class 2 NI qualifies you for State Pension entitlement and access to certain contributory benefits including Maternity Allowance, Employment and Support Allowance, and Bereavement Support Payment. If your profits are below £7,105, you can pay Class 2 voluntarily to protect these entitlements, at the £3.65/week rate.
Since April 2024, HMRC no longer requires Class 2 to be paid if your profits are above the Small Profits Threshold: it is treated as paid at no cost, so you keep your State Pension qualifying years without paying anything. Only those with profits below £7,105 need to decide whether to pay the voluntary £3.65/week to protect their entitlement.
Class 4 National Insurance 2026/27
| Profits | Class 4 NI rate |
|---|---|
| Up to £12,570 | 0% |
| £12,570 to £50,270 | 6% |
| Over £50,270 | 2% |
Class 4 NI is percentage-based and calculated on your annual trading profits. You pay 6% on profits between £12,570 (the Lower Profits Limit) and £50,270 (the Upper Profits Limit), and 2% on profits above that. At £40,000 of trading profits, your Class 4 NI is: 6% x (£40,000 - £12,570) = 6% x £27,430 = £1,646.
Class 4 NI is lower than Class 1 employee NI in the main band: 6% against 8% on earnings between the same thresholds, following the cut from 9% to 6% that took effect in April 2024. Self-employed people also do not pay employer NI (currently 15% on earnings above £96/week), so an employer-employee combination pays significantly more NI overall than a self-employed person with the same gross earnings.
Self-employed vs employed take-home at the same gross
The following comparison assumes no pension contributions, no student loan, and standard tax code 1257L for the employed person. The self-employed person's profits are assumed to be net of allowable business expenses. Neither includes the employer's NI cost.
| Gross/Profits | Employed NI (Class 1) | Self-employed NI (Cl.2+4) | Employed take-home | SE take-home |
|---|---|---|---|---|
| £30,000 | £1,394 | £1,046 | £25,120 | £25,468 |
| £50,000 | £2,994 | £2,246 | £39,520 | £40,268 |
| £80,000 | £3,611 | £2,857 | £56,957 | £57,711 |
Self-employed people pay less NI in the main band (Class 4 at 6% vs Class 1 at 8%, with no compulsory Class 2 since April 2024) and also avoid the 15% employer NI that their employed counterparts' employers pay separately.
Payments on Account: what to budget for
HMRC's Payments on Account system means that if your Self Assessment tax bill exceeds £1,000, you must pay 50% of next year's estimated tax on 31 January and 50% more on 31 July. In your first full year of self-employment, this creates a large initial outlay: you pay your year-one tax bill in January, plus 50% of an estimated year-two bill.
Practical tip: Set aside 25-30% of each invoice payment into a separate savings account as you go, specifically for your tax and NI bill. This avoids the shock of the January deadline.
Frequently asked questions
What National Insurance do self-employed people pay in 2026/27?+-
Most self-employed people pay no Class 2 NI in 2026/27. Since April 2024, if your profits are above the Small Profits Threshold of £7,105, Class 2 is treated as paid at no cost, so you get the State Pension credit for free. If your profits are below £7,105 you can pay Class 2 voluntarily at £3.65 a week (£189.80 a year) to protect your entitlement. You also pay Class 4 NI at 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270. Self-employed people do not pay employee Class 1 NI, and employers do not pay employer NI on their behalf.
Is income tax the same for self-employed and employed people?+-
Yes. Income tax rates and bands are identical for both employed and self-employed people. The personal allowance of £12,570 applies, and the same rest-of-UK or Scottish bands apply. The difference is that self-employed people pay their income tax through Self Assessment (usually in January and July payments on account) rather than through PAYE deductions on each payslip.
What are Payments on Account?+-
Payments on Account are advance tax payments that HMRC requires self-employed people to make. If your Self Assessment tax bill exceeds £1,000, HMRC will ask you to pay 50% of next year's estimated tax on 31 January and another 50% on 31 July. This means that in your first year of self-employment, you often face a bill of around 150% of your first year's tax: the year's actual bill plus 50% of the next year's estimate.
How does Class 2 NI work now that it is no longer compulsory for most people?+-
Since April 2024, compulsory Class 2 NI was abolished. If your profits are above the Small Profits Threshold (£7,105 in 2026/27), Class 2 is treated as paid automatically, at no charge, and still counts towards your State Pension qualifying years and access to contributory benefits. For 2026/27, the voluntary Class 2 rate is £3.65 per week. If your profits are below £7,105, you can still choose to pay Class 2 voluntarily at that rate to protect your entitlement to these benefits.