Income Tax and National Insurance for a UK sole trader in 2026 to 2027, with two worked examples. Cited to GOV.UK, checked 20 October 2026.

Short answer: you pay Income Tax and National Insurance on your profit, not on your turnover. Profit is your self-employed income minus your allowable expenses. For the 2026 to 2027 tax year, the first £12,570 of income is tax-free for most people. Above that you pay 20% Income Tax up to £50,270, then 40%. Class 4 National Insurance is 6% on profits between £12,570 and £50,270, then 2%.

Step 1: work out your profit

GOV.UK says you work out your profits by deducting your expenses from your self-employed income. What counts as an expense is covered in What expenses can a sole trader claim?

Step 2: Income Tax

GOV.UK gives the current tax year as 6 April 2026 to 5 April 2027. The standard Personal Allowance is £12,570, the amount of income you do not pay tax on. These bands apply if you have the standard allowance:

Band	Taxable income	Tax rate
Personal Allowance	Up to £12,570	0%
Basic rate	£12,571 to £50,270	20%
Higher rate	£50,271 to £125,140	40%
Additional rate	Over £125,140	45%

Your Personal Allowance goes down by £1 for every £2 that your adjusted net income is above £100,000. It is zero at £125,140 or above. Income Tax bands are different in Scotland.

Step 3: National Insurance

GOV.UK sets out the self-employed rates for 2026 to 2027:

• Profits of £7,105 or more a year: Class 2 contributions are treated as paid, so you do not pay them.
• Profits above £12,570: you pay Class 4 at 6% on profits from £12,570 to £50,270, and 2% on profits over £50,270.
• Profits under £7,105: you pay nothing, but you can choose to pay voluntary Class 2 at £3.65 a week.

Most people pay Class 2 and Class 4 through Self Assessment.

Two worked examples

These are my calculations from the GOV.UK rates above. They assume 2026 to 2027, the standard Personal Allowance, England, Wales or Northern Ireland rates, no other income, no student loan and no tax already paid. They are illustrations, not your bill.

Profit after expenses	£30,000	£60,000
Income Tax	£3,486	£11,432
Class 4 National Insurance	£1,045.80	£2,456.60
Total	£4,531.80	£13,888.60

How the £30,000 figure works: £30,000 minus £12,570 is £17,430. At 20% that is £3,486 Income Tax. At 6% it is £1,045.80 Class 4. For £60,000: £37,700 at 20% is £7,540 and £9,730 at 40% is £3,892, so £11,432 Income Tax. Class 4 is £37,700 at 6% (£2,262) plus £9,730 at 2% (£194.60), so £2,456.60.

What to do next

• Keep records of income and expenses so your profit figure is right.
• Check how much you need to tell HMRC about and by when. GOV.UK explains how to register for Self Assessment.
• If your situation is not simple, such as Scottish taxpayer status, income over £100,000 or other income, check GOV.UK or ask HMRC.

Sources

GOV.UK, Income Tax rates and Personal Allowances; Self-employed National Insurance rates. Checked on 20 October 2026. General information, not tax advice. Rates change each tax year, so check the source for your own position.

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