What taxes do self-employed people pay?

Sole traders and freelancers pay three main taxes: income tax on profits above the personal allowance (£12,570 for 2026/27), Class 2 National Insurance (a flat £3.45/week if profits exceed £6,725), and Class 4 NI (6% on profits between £12,570 and £50,270, then 2% above that). These are all reported and paid through Self Assessment.

What is Class 2 National Insurance?

Class 2 NI is a flat-rate weekly contribution paid by self-employed people. For 2026/27 it is £3.45 per week (£179.40 per year). It is only due if your profits exceed the Small Profits Threshold of £6,725. Class 2 contributions count towards your entitlement to the State Pension and some contributory benefits, so paying them voluntarily even if profits are below the threshold may be worthwhile.

What is Class 4 National Insurance?

Class 4 NI is a percentage-based contribution charged on self-employed profits. For 2026/27 the rate is 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270. Unlike Class 2, Class 4 contributions do not count towards State Pension entitlement. They are paid alongside income tax via Self Assessment.

What expenses can I deduct from my self-employed income?

You can deduct allowable business expenses from your gross income to calculate your taxable profit. These include: office costs, travel and vehicle expenses (actual costs or flat-rate mileage), stock and materials, marketing and advertising, professional fees, bank charges, business insurance, and a proportion of home working costs. Capital items (equipment, computers) are handled through the Annual Investment Allowance rather than direct deduction.

When do I need to submit a Self Assessment tax return?

You must register for Self Assessment and file a return if you are self-employed and earn more than £1,000 from self-employment (the trading allowance). The deadline for online returns is 31 January following the end of the tax year. You must also pay any tax owed by 31 January, with a second payment on account due on 31 July if your bill exceeds £1,000.

Can I reduce my tax bill with a pension contribution?

Yes. Self-employed people can contribute to a personal pension (SIPP or stakeholder pension). Contributions receive basic-rate tax relief at source, and higher or additional-rate taxpayers can claim further relief through Self Assessment. Pension contributions also reduce your adjusted net income, which can preserve your personal allowance if income is between £100,000 and £125,140.

Tax & Income

Self-Employed Tax Calculator

Calculate income tax, Class 2 and Class 4 National Insurance for sole traders and freelancers. Based on 2026/27 rates.

Updated April 2026

Your details

Annual taxable profit

Gross income minus allowable business expenses

Tip: Enter your profit after deducting all allowable expenses. Pension contributions can also reduce your taxable profit.

2026/27 key rates

Personal allowance£12,570

Basic rate (20%)up to £50,270

Higher rate (40%)£50,270-£125,140

Class 2 NI£3.45/week

Class 4 NI (main)6% on £12,570-£50,270

Class 4 NI (upper)2% above £50,270

Your results

Tax on £35,000 of Self-Employed Profit in 2026/27

Annual take-home profit

£28,989

Total tax £6,011 · Effective rate 17.17%

Annual profit: £35,000
Income tax: £4,486
Class 2 + Class 4 NI: £1,525
Take-home profit: £28,989

Breakdown

Annual profit: £35,000
Personal allowance: -£12,570
Taxable profit: £22,430
Income tax: -£4,486
Class 2 NI (£179.40/year): -£179.40
Class 4 NI: -£1,346
Total tax & NI: -£6,011
Take-home profit: £28,989

Income tax breakdown

Band	Taxable Profit	Rate	Tax
Basic rate (20%)	£22,430	20%	£4,486
Total income tax			£4,486

Class 4 National Insurance breakdown

Band	Profit in Band	Rate	NI
Class 4 main rate (6%)	£22,430	6%	£1,346
Total Class 4 NI			£1,346

Related calculators

Income Tax Calculator National Insurance Calculator Dividend Tax Calculator Salary Sacrifice Calculator

Related guides

Self-Assessment Tax Return Guide

Frequently asked questions

Sources & methodology

Built and maintained by Tim, a personal finance enthusiast (not a financial adviser). Last reviewed April 2026. Rates and thresholds come from official UK government publications.

HMRC: Income Tax rates and allowances · Official rates, bands and thresholds
GOV.UK: National Insurance rates · Employee and employer NI rates
Scottish Government: Income Tax · Scottish income tax rates and bands

Figures are estimates only. This is not financial or tax advice. For help with your specific situation, speak to HMRC or a qualified adviser.