UK Self-Employed Tax Calculator 2026/27

For 2026/27 you pay income tax on your profit above the £12,570 personal allowance at 20%, 40% and 45% (Scotland uses six bands from 19% to 48%), plus Class 4 National Insurance at 6% on profits between £12,570 and £50,270 and 2% above that. A sole trader with £80,000 of profit and no other income pays £19,432 income tax and £2,857 Class 4, a total of £22,289.

Start with turnover, deduct allowable expenses or the £1,000 trading allowance to reach profit, then add any salary or other income. Apply the personal allowance and income tax bands to the total. Class 4 National Insurance is worked out on the trading profit alone, not on salary. This calculator does both steps and shows which part is collected through PAYE and which part lands on your Self Assessment bill.

Not as a compulsory charge. Since April 2024, anyone with profits of £7,105 or more is treated as having paid Class 2 and receives a State Pension credit without paying anything. If your profits are below £7,105 you can pay voluntarily at £3.65 a week, £189.80 a year, which is one of the cheapest ways to buy a qualifying year.

Payments on account are two advance instalments towards next year’s bill, each equal to half of this year’s income tax and Class 4 National Insurance, due on 31 January and 31 July. You do not make them if your Self Assessment bill was under £1,000, or if more than 80% of your tax was already collected at source, such as through PAYE. Student loan and capital gains tax are never included.

In your first year there are no instalments, so the 31 January bill contains the full year’s tax plus the first payment on account for the following year — 150% of a year’s liability — with another 50% due on 31 July. For a sole trader owing £22,289 that means around £33,433 in January. The calculator shows both figures so you can set the cash aside.

No. The trading allowance and actual expenses are an either/or choice. If your turnover is above £1,000 you can deduct £1,000 instead of your real costs, which only helps when your expenses are lower than £1,000. The calculator flags when the allowance would beat the expenses you entered.

Both are added together for income tax, and your personal allowance is normally used against the salary first through your tax code. Your employer deducts PAYE and Class 1 National Insurance on the salary, while the trading profit is taxed through Self Assessment and carries Class 4 on its own. That is why a side business is often taxed at 40% plus 2% from its very first pound.

A personal pension contribution receives 20% relief at source and extends your basic-rate band, so higher and additional rate taxpayers save more through Self Assessment. It also cuts adjusted net income, which restores the personal allowance between £100,000 and £125,140 and can give 60% relief. It does not reduce Class 4 National Insurance, which is always charged on the full trading profit.

Yes. HMRC works out 9% of your total income above your plan threshold (6% above £21,000 for a Postgraduate Loan) and adds it to your balancing payment, after deducting anything taken through payroll. For 2026/27 the thresholds are £26,900 for Plan 1, £29,385 for Plan 2, £33,795 for Plan 4 and £25,000 for the new Plan 5.

Making Tax Digital for Income Tax became mandatory on 6 April 2026 for sole traders and landlords with qualifying turnover over £50,000, requiring digital records and quarterly updates. The threshold falls to £30,000 from April 2027 and £20,000 from April 2028. HMRC has confirmed that anyone who filed the SA109 residence pages for 2024/25 is exempt until April 2027, which covers most internationally mobile taxpayers.

Scottish taxpayers pay income tax on trading profit at 19%, 20%, 21%, 42%, 45% and 48%, with the 45% advanced rate starting at £75,001. Class 4 National Insurance stays UK-wide at 6% and 2%. At £80,000 of profit a Scottish sole trader pays about £2,300 more income tax than one in England.

The effective rate is everything you pay — income tax, National Insurance and student loan — divided by your total income. The marginal rate is what you lose on the next £1 of profit. A sole trader between £50,270 and £100,000 in England pays 42% at the margin, rising to 62% between £100,000 and £125,140 as the personal allowance is withdrawn.

Once profits are comfortably above the higher-rate threshold, a company paying Corporation Tax at 19% to 25% with dividends on top can reduce the combined bill, but it adds accounts, payroll and director duties. For an American, a UK company also triggers US controlled foreign corporation reporting and can cost more than it saves, so the comparison must be run on both sides of the Atlantic.

By default the US charges 15.3% self-employment tax on 92.35% of your worldwide net earnings, and the Foreign Earned Income Exclusion does not reduce it. Under the US–UK totalisation agreement, however, a UK resident covered by National Insurance is exempt from US self-employment tax once they obtain a certificate of coverage from HMRC and attach it to their US return each year.

Because you live and trade in Britain rather than being posted there, the leaving-the-UK online service is the wrong route. You write to the HMRC National Insurance Contributions office with the details the agreement requires. If HMRC will not issue one, the IRS accepts an alternative statement under Revenue Ruling 92-9. Refunds of self-employment tax already paid are limited to the normal three-year window.

No. Class 2 and Class 4 National Insurance are social security contributions covered by the totalisation agreement, not income taxes, so they earn no US foreign tax credit. Only the UK income tax on your trading profit is creditable. Counting National Insurance as a credit overstates your credits and is a common error on US returns.

The 2026/27 tax year runs from 6 April 2026 to 5 April 2027. The online Self Assessment return and the balancing payment are due by 31 January 2028, with the second payment on account due on 31 July 2028. If you started trading during 2026/27, you must register for Self Assessment by 5 October 2027.

No. It gives a reliable 2026/27 estimate for a sole trader using standard rules, but it does not model losses, capital allowances, basis-period transition profits, the National Insurance annual maximum or foreign income. Business owners with cross-border income should have both their UK and US positions reviewed together.