Self-Employed Tax Calculator UK 2026/27
Income tax, Class 2 NI, and Class 4 NI for sole traders. Updated 17 April 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
£3.45 per week (£179.40 per year)
Applies if trading profits exceed the Small Profits Threshold of £12,570
Class 2 NI is a flat-rate weekly contribution paid by self-employed people whose trading profits are above the Small Profits Threshold. For 2026/27 this is £3.45 per week, or £179.40 over the full tax year. It does not vary with your income: whether you earn £15,000 or £150,000 in trading profits, you pay the same flat amount if you are above 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 £12,570, you can pay Class 2 voluntarily to protect these entitlements, at the same £3.45/week rate.
Since April 2024, HMRC no longer requires Class 2 to be paid as a formal obligation if your profits are above the Small Profits Threshold: it is technically voluntary. However, most self-employed people still pay it because the cost (£179.40) is very small relative to the benefit of maintaining qualifying years for the State Pension (currently worth up to £11,502 per year in retirement).
Class 4 National Insurance 2026/27
| Profits | Class 4 NI rate |
|---|---|
| Up to £12,570 | 0% |
| £12,570 to £50,270 | 9% |
| Over £50,270 | 2% |
Class 4 NI is percentage-based and calculated on your annual trading profits. You pay 9% 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: 9% x (£40,000 - £12,570) = 9% x £27,430 = £2,469.
Unlike Class 1 employee NI (which is 8% on earnings between the same thresholds), Class 4 NI is slightly higher at 9% in the main band. This is partially offset by the fact that self-employed people 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 | £1,748 | £25,120 | £24,766 |
| £50,000 | £2,994 | £3,548 | £39,520 | £38,966 |
| £80,000 | £3,611 | £4,167 | £56,957 | £56,401 |
Self-employed people pay slightly more NI in the main band (9% vs 8%) but 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?+-
Self-employed people pay Class 2 NI (a flat weekly rate of £3.45, totalling £179.40 per year) if their profits exceed the Small Profits Threshold of £12,570. They also pay Class 4 NI at 9% 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, Class 2 NI became effectively voluntary for most self-employed people with profits above the Small Profits Threshold. However, paying it is still advisable for many people because it counts towards your State Pension qualifying years and access to contributory benefits. For 2026/27, the rate is £3.45 per week. If your profits are below £12,570, you can still choose to pay Class 2 voluntarily to protect your entitlement to these benefits.