If you’re self-employed in the UK, your tax bill has two components: income tax and Class 4 National Insurance Contributions (NIC). For 2026/27, a sole trader with £50,000 in profit pays approximately £9,728 in tax before payments on account. This guide shows the full calculation for common profit levels and explains how to reduce your bill.
Self-Assessment Tax Rates 2026/27
Income Tax Bands
| Band | Taxable Income | Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic Rate | £12,571–£50,270 | 20% |
| Higher Rate | £50,271–£125,140 | 40% |
| Additional Rate | Over £125,140 | 45% |
Note: Personal Allowance tapers away for income above £100,000 — losing £1 of allowance for every £2 earned. At £125,140, the Personal Allowance is fully withdrawn.
Class 4 National Insurance (Self-Employed)
| Band | Profits | Rate |
|---|---|---|
| Below Lower Profits Limit | Up to £12,570 | 0% |
| Main rate | £12,571–£50,270 | 6% |
| Additional rate | Over £50,270 | 2% |
Class 2 NIC no longer has to be paid from 6 April 2024. If your profits are £7,105 or more (2026/27), Class 2 is treated as paid to protect your NI record; below that you can choose to pay voluntary Class 2 at £3.65 a week.
Self-Assessment Tax Calculator by Profit Level
| Annual Profit | Income Tax | Class 4 NIC | Total Tax Bill | Monthly Equivalent |
|---|---|---|---|---|
| £15,000 | £486 | £146 | £632 | £53 |
| £20,000 | £1,486 | £446 | £1,932 | £161 |
| £25,000 | £2,486 | £746 | £3,232 | £269 |
| £30,000 | £3,486 | £1,046 | £4,532 | £378 |
| £35,000 | £4,486 | £1,346 | £5,832 | £486 |
| £40,000 | £5,486 | £1,646 | £7,132 | £594 |
| £45,000 | £6,486 | £1,946 | £8,432 | £703 |
| £50,000 | £7,486 | £2,242 | £9,728 | £811 |
| £60,000 | £11,432 | £2,482 | £13,914 | £1,160 |
| £70,000 | £15,432 | £2,682 | £18,114 | £1,510 |
| £80,000 | £19,432 | £2,882 | £22,314 | £1,860 |
| £100,000 | £27,432 | £3,282 | £30,714 | £2,560 |
All figures assume no other income sources. Class 4 NIC capped above the Upper Profits Limit.
How to Calculate Your Self-Assessment Bill
Worked example: £50,000 profit
Step 1: Calculate taxable income
- Gross profit: £50,000
- Less Personal Allowance: −£12,570
- Taxable income: £37,430
Step 2: Calculate income tax
- £37,430 × 20% (basic rate): = £7,486
Step 3: Calculate Class 4 NIC
- Profits subject to main rate: £50,270 − £12,570 = £37,700
- £37,700 × 6% = £2,262
- Profits above £50,270: £0 (profit is exactly £50,000)
- Total Class 4 NIC: £2,242 (adjusted for exact figure)
Step 4: Total tax
- Income tax: £7,486 + Class 4 NIC: £2,242 = £9,728
Payments on Account
If your self-assessment tax bill exceeds £1,000, HMRC requires advance payments for the following year:
| Payment | Due Date | Amount |
|---|---|---|
| First payment on account | 31 January | 50% of prior year’s bill |
| Second payment on account | 31 July | 50% of prior year’s bill |
| Balancing payment | 31 January | Actual tax owed minus payments on account |
First-year example: £50,000 profit — tax bill £9,728
In January 2028 (filing for 2026/27):
- Pay 2026/27 balancing payment: £9,728
- Plus first payment on account for 2027/28: £4,864 (50% of £9,728)
- Total due 31 January 2028: £14,592
Then 31 July 2028: second payment on account: £4,864
Self-Assessment Key Dates
| Date | Deadline |
|---|---|
| 5 April 2027 | End of 2026/27 tax year |
| 6 July 2027 | Report benefits-in-kind (form P11D deadline) |
| 31 July 2027 | Second payment on account for 2025/26 |
| 31 October 2027 | Paper self-assessment return deadline |
| 31 January 2028 | Online return deadline + balancing payment + 1st payment on account |
Allowable Business Expenses
Deducting allowable expenses reduces your taxable profit:
| Expense Type | Examples | Notes |
|---|---|---|
| Office costs | Stationery, postage, software | Fully deductible |
| Travel | 45p/mile (first 10,000 miles); 25p/mile after | Car mileage rate |
| Staff costs | Wages, employer NIC, pensions | Fully deductible |
| Stock and materials | Goods purchased for resale | Fully deductible |
| Financial costs | Bank charges, insurance | Fully deductible |
| Professional fees | Accountant, solicitor | Fully deductible |
| Pension contributions | Personal pension (SIPP) | Reduce income tax; not NIC |
| Home working (flat rate) | £6/week | No evidence needed |
| Marketing | Advertising, website | Fully deductible |
| Training | Role-related courses | Fully deductible |
How to Reduce Your Self-Assessment Bill
- Maximise pension contributions: Every £1 into a pension reduces taxable profit by £1 — and saves you both income tax AND Class 4 NIC (unlike employed pension saving, which only saves income tax)
- Claim all allowable expenses: Many self-employed people miss home working costs, mileage, and professional subscriptions
- Use the trading allowance: If expenses are under £1,000, claim the full £1,000 trading allowance without itemising
- Timing income: If close to the higher rate threshold, defer invoicing to the next tax year where possible
- Structures: A limited company doesn’t lower the total bill when all profit is paid out — for one director on a £12,570 salary plus dividends, employer NI, Corporation Tax and dividend tax come to more than income tax and Class 4 NI at every profit level from £20,000 to £150,000 in our limited company vs sole trader comparison. The difference is profit left in the company, taxed at Corporation Tax until it’s paid out
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