Self-employed tax calculator

Income tax and Class 4 National Insurance on your profit, and how your take-home compares to an employee on the same money. 2026/27 rates.

By James Burfield Rates from gov.uk, checked 16 July 2026 How this works

How self-employed tax works

Two things come out of a sole trader's profit: income tax and National Insurance. The income tax is exactly the same as an employee pays, on the same bands, with the same Personal Allowance. National Insurance is where it differs.

Class 4 National Insurance

You pay 6% on profit between £12,570 and £50,270, then 2% on anything above. An employee pays 8% on the same band, so on identical earnings you keep two points more, up to about £750 a year.

Class 2 National Insurance

For most people, nothing. Since April 2024 Class 2 is not charged once your profit passes the small profits threshold of £7,105. Below that, it is voluntary at £3.65 a week if you want to keep your State Pension record complete.

The catch with the comparison

Self-employment does come out ahead on the tax, but only on the tax. An employee gets paid holiday, sick pay, an employer pension contribution and a set of employment rights. A sole trader gets none of those and carries the risk of unpaid invoices and quiet months. The £750 is real; so is everything it leaves out.

VAT sits outside this calculation entirely. It is charged on turnover rather than profit, so it does not change your income tax or National Insurance, but it changes what you invoice once you cross the registration threshold. Toolbay's VAT calculator handles that side.

Questions

How much tax does a self-employed person pay?

The same income tax as anyone else on your profit, plus Class 4 National Insurance at 6% on profit between £12,570 and £50,270, then 2% above that. On a £50,000 profit that is about £7,486 income tax and £2,246 National Insurance.

Is it cheaper to be self-employed than employed?

On tax alone, slightly. Class 4 National Insurance is 6% where an employee's Class 1 is 8%, so a sole trader keeps two points more on earnings between £12,570 and £50,270. That is about £750 a year at the top of that band. But an employee gets holiday pay, sick pay, an employer pension and employment rights, none of which self-employment includes.

Do I still pay Class 2 National Insurance?

Almost certainly not. Since April 2024 Class 2 is not charged once your profit passes the small profits threshold of £7,105: you are treated as having paid it. Below that threshold it becomes voluntary, at £3.65 a week, if you want to protect your State Pension record.

What counts as profit?

Your income after allowable business expenses. This calculator takes your profit as the figure to work from, so subtract your expenses first. Tax and National Insurance are then charged on the profit, not on your turnover.

What are payments on account?

If your Self Assessment bill is over £1,000, HMRC usually asks you to pay next year's tax in two instalments up front, in January and July, each half of this year's bill. It does not change what you owe overall, but the first year can feel like paying one and a half times because you settle this year and prepay next year together.

Is self-employed tax different in Scotland?

The income tax is: Scottish taxpayers use the Scottish bands on their profit. National Insurance is not devolved, so Class 4 is the same everywhere in the UK. Set your region below to see the difference.