Self-Employed Tax Calculator (UK) — Income Tax & Class 4 NI
Free UK self-employed tax calculator for sole traders. Enter your annual turnover and expenses to estimate take-home pay after Income Tax and Class 4 National Insurance, with automatic Trading Allowance comparison.
How self-employed tax works in the UK
Unlike employees who are taxed through PAYE (Pay As You Earn), self-employed sole traders in the UK calculate and pay their own tax once a year through Self Assessment, reporting it directly to HM Revenue and Customs (HMRC). Crucially, tax is charged on your business profit — turnover minus allowable expenses — not on your turnover itself.
Self-employed people also pay a different type of National Insurance: Class 4, based on the level of your profits, rather than Class 1, which employees pay on their salary. The old flat-rate Class 2 contribution was abolished from April 2024, so most sole traders with profits above the Lower Profits Limit now pay Class 4 only. Enter your turnover, expenses and whether you are taxed under Scottish rates, and this calculator estimates your take-home pay after both Income Tax and Class 4 National Insurance.
How to use this calculator
- Enter your annual turnover Your total business income before expenses, excluding VAT.
- Enter your allowable expenses Stock, travel, equipment, and other costs incurred wholly for your business.
- Choose your tax region Select Scotland if you are taxed under Scottish Income Tax rates.
- Check your result Taxable profit, Income Tax and Class 4 National Insurance are calculated automatically to show your take-home pay.
Tips for getting more out of it
- If your allowable expenses exceed £1,000, claiming them in full is usually more beneficial than the Trading Allowance — this calculator compares both automatically and applies whichever is better.
- If your taxable profit falls between £100,000 and £125,140, every extra £1 you earn effectively loses about 60p to tax and the shrinking Personal Allowance combined — this calculator reflects that automatically.
- Scottish Income Tax only changes your Income Tax bill; Class 4 National Insurance rules are identical across the whole of the UK.
- If you have income from more than one business or side hustle, remember that the £1,000 Trading Allowance applies once in total across all of your self-employed income, not once per business.
- This is an estimate only. Your actual Self Assessment bill can be affected by pension contributions, carried-forward losses, Capital Allowances and other individual circumstances not modelled here.
Self-employed tax glossary
- Scottish Income Tax
- The set of Income Tax bands set independently by the Scottish Parliament. Unlike the three bands used in England, Wales and Northern Ireland (20%/40%/45%), Scotland uses six bands (19%/20%/21%/42%/45%/48%). National Insurance rules are the same across the whole UK.
- Allowable expenses
- Costs incurred wholly and exclusively for running your business, which can be deducted from turnover when calculating taxable profit. Examples include stock, business travel, equipment and advertising — personal spending does not qualify.
- Cash profit
- The actual money you have left after subtracting your real allowable expenses from turnover. This can differ from your taxable profit if you use the Trading Allowance instead of your actual expenses.
- Taxable profit
- The amount used to calculate your Income Tax and National Insurance, found by deducting whichever is larger — your actual allowable expenses, or the flat £1,000 Trading Allowance — from your turnover.
- Personal Allowance
- The amount of income everyone can normally earn tax-free in the UK (£12,570 for 2026/27). It is reduced by £1 for every £2 of income above £100,000, reaching zero at £125,140.
- Class 4 National Insurance
- National Insurance charged on a self-employed person's profits: 6% between the Lower Profits Limit (£12,570) and Upper Profits Limit (£50,270), and 2% above that. The rate and thresholds differ from the Class 1 contributions employees pay.
Frequently asked questions
Side Note — Why don't the self-employed pay Class 2 National Insurance any more?
Until April 2024, self-employed people in the UK paid a flat weekly Class 2 National Insurance contribution regardless of how much profit they made. It was mainly there to build entitlement to the State Pension and certain benefits, but it added an extra layer of paperwork that had been criticised for years. The 2024 Budget scrapped this compulsory flat-rate charge, meaning sole traders with profits above the Lower Profits Limit now get their State Pension record credited automatically, with nothing extra to pay.
At the same time, the Class 4 rate itself was cut — from 9% in 2023/24 down to 6% from 2024/25 onward. This was framed as a broader effort to reduce the tax burden on the self-employed. Compare that to the 8% Class 1 rate employees pay between the same thresholds, and someone self-employed on similar profits actually faces a lower National Insurance rate than an employee on the same salary — a gap sometimes explained as a rough offset for the sick pay, holiday pay and employer pension contributions that employees receive but sole traders do not.
The £1,000 Trading Allowance has its own backstory too. It was introduced in 2017 out of a simple idea: people with a small side income — from selling handmade crafts online to the occasional freelance gig — shouldn't necessarily have to file a full Self Assessment return over it. If your total trading turnover for the year is £1,000 or less, the allowance can wipe out the tax bill entirely, which is exactly why it has become a familiar reference point for anyone dabbling in a side hustle.