If you are self-employed, you pay Income Tax and Class 4 National Insurance on your profits through Self Assessment. For 2026/27 your first £12,570 of profit is covered by the Personal Allowance, then Income Tax applies at 20%, 40% and 45%, and Class 4 National Insurance is charged at 6% and 2%. The calculator above combines both so you can see your total bill and what to set aside.
You are taxed on profit (income minus allowable expenses), not turnover. The first £1,000 of trading income is covered by the trading allowance if your costs are low.
How is self-employed tax calculated in 2026/27?
Add up your income, deduct allowable expenses to reach your profit, then apply Income Tax and Class 4 National Insurance to the profit above the thresholds, as explained in HMRC's guidance.
| Profit band (2026/27) | Income Tax | Class 4 NI |
|---|---|---|
| Up to £12,570 | 0% | 0% |
| £12,571 to £50,270 | 20% | 6% |
| £50,271 to £125,140 | 40% | 2% |
| Over £125,140 | 45% | 2% |
Class 2 National Insurance is no longer charged for most people, though you can pay it voluntarily to protect your State Pension.
How much tax will I pay on £40,000 of self-employed profit?
On £40,000 of profit in 2026/27, the first £12,570 is tax-free. The remaining £27,430 is taxed at 20% Income Tax (£5,486) and 6% Class 4 National Insurance (£1,646), a total of about £7,132. You would also make payments on account towards next year's bill. See how your Self Assessment bill is calculated.
What expenses can the self-employed claim?
You can deduct costs incurred wholly for the business, including stock, tools, mileage, use of home and professional fees. Our list of allowable expenses for sole traders covers what counts. If you are just starting, read how to register as self-employed. For hands-on help, see our Self Assessment service.
Related guides and calculators
- How your Self Assessment tax bill is calculated
- Allowable expenses for sole traders
- Income tax calculator
- National Insurance calculator
Frequently asked questions
How much tax do the self-employed pay in 2026/27?
Self-employed people pay Income Tax at 20%, 40% and 45% on profit above the £12,570 Personal Allowance, plus Class 4 National Insurance at 6% on profit between £12,570 and £50,270 and 2% above that, all through Self Assessment.
What is Class 4 National Insurance?
Class 4 National Insurance is paid by the self-employed on their profits. For 2026/27 it is 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270. It is collected with your Income Tax through Self Assessment.
Do I pay Class 2 National Insurance if self-employed?
For most self-employed people Class 2 National Insurance is no longer charged. If your profits are below the small-profits threshold you can still pay it voluntarily to protect your State Pension and benefit entitlement.
What are payments on account?
Payments on account are advance payments towards your next Self Assessment bill, due on 31 January and 31 July. Each is usually 50% of your previous year's tax. They apply once your bill is over £1,000 and most of your tax is not collected at source.
What is the trading allowance?
The trading allowance lets you earn £1,000 of trading income tax-free in a year. If your business costs are below £1,000 you can claim the allowance instead of your actual expenses, whichever leaves you better off.