Tax when you work for yourself
When you are self-employed nobody takes tax off before you are paid, so the bill arrives later and all at once. These guides work through real figures for the 2026/27 tax year, so you can see where each pound of the bill comes from.
3 guides in this subject
Every guide in self-employed
A sole trader with £42,000 profit in 2026/27 owes £7,651.80 in income tax and National Insurance. Here is the working, and how to turn it into a monthly figure.
If your side income was more than £1,000 before expenses, yes. The £1,000 trading allowance can still cut the tax. Worked for an employee who sold £1,400 of goods in 2026/27.
A sole trader on £60,000 profit who pays £4,000 into a personal pension gets £5,000 in the pot and a £1,000 lower tax bill. Worked for 2026/27.
Common questions
Income tax at 20%, 40% or 45% above your personal allowance, and Class 4 National Insurance at 6% on profits between £12,570 and £50,270 and 2% above that. Class 2 is voluntary.
Through Self Assessment, with the balance for a tax year due on 31 January after it ends. Once your bill passes £1,000 you usually make payments on account as well.