2025/26 Tax Year
Calculate your income tax, Class 4 National Insurance and Payment on Account as a UK sole trader — updated for 2025/26.
Enter your annual income and expenses, then hit Calculate to see your full self-employed tax breakdown including Payment on Account.
| Band | Income | Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic Rate | £12,571 – £50,270 | 20% |
| Higher Rate | £50,271 – £125,140 | 40% |
| Additional Rate | Over £125,140 | 45% |
| Profit | Rate |
|---|---|
| Up to £12,570 | 0% |
| £12,571 – £50,270 | 6% |
| Over £50,270 | 2% |
Class 2 NI (£3.45/week) is included within Self Assessment for profits above £12,570.
As a sole trader in the UK you pay Income Tax on your profits above the Personal Allowance (£12,570 for 2025/26), plus Class 4 National Insurance on profits above the same threshold. You also pay Class 2 NI — a flat £3.45 per week — which is collected via your Self Assessment return rather than separately.
Class 4 NI is charged on your annual profits (after allowable expenses). You pay 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270. Unlike income tax, Class 4 NI is not affected by your Personal Allowance tapering for higher earners.
Payment on Account (POA) is HMRC's advance-payment system for self-employed people. If your tax bill (income tax + Class 4 NI) exceeds £1,000, HMRC requires you to pre-pay half next year's estimated bill in two instalments — 31 January and 31 July. This means in your first year of trading you may owe up to 150% of your annual bill at once.
You must register for VAT once your taxable turnover (gross income, before expenses) exceeds £90,000 in any rolling 12-month period. Once registered, you charge VAT to customers at the standard rate (20%) and must file quarterly VAT returns. The calculator flags this threshold automatically.
Yes. Class 2 NI (£3.45/week = £179.40/year) is included in the total tax bill for any self-employed person with profits above £12,570.
Yes — enter your pension contributions as a separate field. Personal pension contributions reduce your taxable income, which can also keep you below the £100,000 Personal Allowance taper threshold.
Allowable expenses include office costs, travel (excluding commuting), staff costs, stock and materials, financial and legal fees, marketing, and a portion of home costs if you work from home. Enter your total allowable expenses in the expenses field.
Yes. Between £100,000 and £125,140 your Personal Allowance is gradually withdrawn at £1 for every £2 of income, creating an effective marginal rate of 60% (40% income tax + 20% from lost allowance). Making pension contributions is the most effective way to reduce income into this band.
The calculator uses the official 2025/26 tax rates and thresholds. It gives a reliable estimate for straightforward self-employment income. For complex situations — multiple income sources, partnership income, or prior-year losses — always consult a qualified accountant.
This calculator is for guidance only. Tax rates and thresholds are correct for the 2025/26 tax year (England, Wales and Northern Ireland). Always consult a qualified accountant or tax adviser for personalised advice. SterlingCalc accepts no liability for decisions made based on these estimates.