Your inputs
What this means
You have a straightforward profit profile here, so the main task is simply ring-fencing the tax reserve before it gets mixed into day-to-day cash flow.
Why is this based on profit, not turnover?
Self-employed tax is charged on profit after allowable business costs, not on revenue. Turnover tells you how much cash came in; profit is the number the tax system usually cares about.
Why do people get caught out by payments on account?
Once your Self Assessment bill is large enough, HMRC can ask for advance payments towards the following year as well. This calculator focuses on the underlying annual tax drag, so use the reserve figure as a minimum cash buffer rather than a promise about your exact January payment.
What about Class 2 National Insurance?
Since April 2024, most sole traders no longer pay mandatory Class 2 NICs, but small profits can still matter for your National Insurance record. If profits are very low, it can be worth checking whether voluntary Class 2 or another qualifying year route matters for State Pension purposes.
Worked examples — see the math on real numbers
Two realistic profit scenarios showing how income tax and Class 2 + Class 4 National Insurance stack up for UK sole traders in 2026/27.
Sarah — freelance copywriter, first full year
| Gross profit (income minus expenses) | £32,000 |
| Personal Allowance (2026/27) | £12,570 |
| Taxable profit | £19,430 |
| Other PAYE income | None |
The math:
- Income tax: £19,430 × 20% = £3,886
- Class 4 NI: (£32,000 − £12,570) × 6% = £1,166
- Class 2 NI: £3.65/week × 52 = £190
- Total tax + NI: £3,886 + £1,166 + £190 = £5,242
Result: Sarah keeps £26,758 after tax — an effective tax rate of 16.4% on her £32,000 profit. She files Self Assessment by 31 January 2027 for 2025/26 profits.
Marcus — IT consultant, higher-rate territory
| Gross profit | £72,000 |
| Personal Allowance | £12,570 |
| Taxable profit | £59,430 |
The math:
- Basic-rate income tax: £37,700 × 20% = £7,540
- Higher-rate income tax: (£59,430 − £37,700) × 40% = £8,692
- Class 4 NI: (£50,270 − £12,570) × 6% + (£72,000 − £50,270) × 2% = £2,262 + £435 = £2,697
- Class 2 NI: £190
- Total: £7,540 + £8,692 + £2,697 + £190 = £19,119
Result: Marcus keeps £52,881 after tax — effective rate 26.6%. He must make two payments on account for 2026/27 (£9,465 each — based on the income tax plus Class 4 NI, as Class 2 is excluded from payments on account) on 31 January and 31 July 2027.
Figures use 2026/27 UK tax-year rates and thresholds. Always verify against your specific payslip or tax statement before acting.
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