Self-employed / sole trader – United Kingdom
Estimate take-home under PAYE (tax, NIC, loans, pension) or sole-trader profit after tax and Class 4 NIC. England/Wales/NI and Scotland; educational — not HMRC payroll.
by Simon Bodych
Methodology & sources
UK salary calculator — methodology (2026/27)
Educational model — not HMRC or payroll software.
PAYE employee
- Personal Allowance £12,570 (frozen to 5 April 2031); tapered by £1 per £2 of income above £100,000 (fully withdrawn at £125,140).
- rUK rates (England / Wales / NI): 20 % (£12,571–£50,270), 40 % (£50,271–£125,140), 45 % (above £125,140).
- Scottish rates 2026/27 (Scottish Budget, 13 January 2026): starter 19 %, basic 20 %, intermediate 21 %, higher 42 %, advanced 45 %, top 48 %.
- Class 1 NIC (category A): employee 8 % between PT £12,570 and UEL £50,270, then 2 %; employer 15 % above Secondary Threshold £5,000.
- Employment Allowance £10,500 per year (the £100k eligibility cap was removed from April 2025); reduces employer Class 1 NIC when employer cost is included.
- Student loans: Plan 1 £26,900, Plan 2 £29,385, Plan 4 £33,795, Plan 5 £25,000 (first repayments from April 2026); rate 9 %. Postgraduate 6 % above £21,000.
- Auto-enrolment qualifying earnings band £6,240–£50,270; minimum 5 % employee / 3 % employer (8 % total).
- Tax-code directives supported: standard (1257L), S/C prefix (Scottish/Welsh), K (negative PA), 0T, BR, D0, D1, D2, NT and the W1/M1/X emergency flag.
Primary references: HMRC — Rates and thresholds 2026/27, Budget 2025 OOTLAR Annex A, Scottish Income Tax 2026/27, TPR — AE thresholds 2026/27.
Self-employed / sole trader
- Profit = revenue − expenses; Income Tax on profit using the same bands as PAYE (with PA taper above £100,000).
- Class 4 NIC: 6 % on profits between LPL £12,570 and UPL £50,270, then 2 % above £50,270.
- Class 2 NIC: mandatory Class 2 was abolished from April 2024; voluntary only at £3.65/week when profit is below the Small Profits Threshold £7,105 (used to preserve NI record).
- Student and postgraduate loans use the same thresholds as PAYE, assessed on annual profit.
HMRC — Self-employed NIC rates, ATT — 2026/27 tax year updates.
Frequently asked questions
United Kingdom - self-employed sole trader
Do I enter turnover or profit after expenses?
Enter both: Annual turnover (£) and Annual expenses (£). The calculator computes profit = turnover − expenses, the base for Income Tax and Class 4 NIC. If you use the trading allowance (£1,000 no-records), enter turnover and zero expenses. Do not enter profit alone as turnover - the result will be wrong.
Class 2 vs. Class 4 NIC - when does each apply?
Class 4: 6% on profit £12,570-£50,270, 2% above - automatic via Self Assessment. Class 2: voluntary (from 2024/25) for profit < £6,725 Small Profits Threshold, rate ~£3.45/week - useful to accrue State Pension qualifying years. Above SPT Class 2 does not exist in 2026/27 (abolished). The calculator has a "Pay voluntary Class 2" toggle.
Payments on account - when and how much?
If tax owed > £1,000, HMRC requires two advances per year: 31 January (half of prior-year tax) and 31 July (the other half). Plus a final balancing payment on 31 January of the following year. So January covers: previous-year balance + 50% of current = a large outflow. The calculator shows annual tax - split the schedule yourself.
Is the £1,000 trading allowance worth using?
Yes, if turnover ≤ £1,000/year and you have nothing to deduct - no bookkeeping or return needed. Above £1,000, choose either: (a) deduct £1,000 from turnover (simplified), or (b) deduct real expenses (better when expenses > £1,000). The calculator does NOT auto-apply it - set expenses = £1,000 to model the allowance.
Do I need to register for VAT?
VAT registration is mandatory when taxable turnover > £90,000/year (2026 threshold). Voluntary registration below that makes sense if your clients are VAT-registered (you can reclaim input VAT). The calculator does NOT model VAT - it is a separate 20% (standard rate) tax on invoices. VAT affects cash flow, not income tax.
What does the model NOT include?
Excludes: capital allowances (Annual Investment Allowance £1M), business vehicle use (flat mileage 45p/10k miles + 25p after), home office (simplified £6/week), loss carry-forward/back, Making Tax Digital (MTD) requirements, partnership distributions, CIS (Construction Industry Scheme) withholdings. Models: rUK/Scotland Income Tax, Class 4 NIC, optional Class 2, student loans.