GikiCalc

What a sole trader owes on their profit

Income Tax and Class 4, with Class 2 treated the way the rules have worked since 2024.

Everything invoiced, before costs

Costs you can deduct — this page does not decide which qualify

Employment, rent, pension. It shares one Personal Allowance with your profit

Tax and National Insurance due

£6,351.80

£30,648.20 left from £37,000 of profit

Profit

£37,000

On the next £100

26.0%

Share of profit

17.2%

What you owe through Self Assessment
Turnover£45,000.00
Allowable expenses−£8,000.00
Profit£37,000.00
Income Tax£4,886.00
Class 4 National Insurance£1,465.80
Total due£6,351.80

You are not charged Class 2

Profits at or above £7,105 are treated as having paid Class 2, so your National Insurance record is protected without a charge. Calculators that still add Class 2 to the bill are following the pre-2024 rules.

Payments on account

The figure HMRC uses to work out payments on account is your Income Tax plus Class 4 — £6,351.80 here. It deliberately leaves out Class 2, student loan and Capital Gains Tax. See what that means for your January bill

The link carries your figures so anyone opening it sees the same calculation. Nothing is sent anywhere.

Figures for the 2026/27 UK tax year. Rates last checked against HMRC on 31 August 2026. See every source.

How to work out sole trader tax

Two things on this page differ from most free self-employed calculators. The first is Class 2: it is no longer a charge. Profits at or above the small profits threshold are treated as having paid it, so your National Insurance record is protected without any money changing hands, and below the threshold it is a voluntary choice rather than a bill. Calculators that still add Class 2 to the total are following pre-2024 rules and overstate what you owe, for the lowest-earning people using them. The second is Class 4, which uses a different rate from the employee National Insurance most people are familiar with, despite sharing the same two thresholds — copying the employee rate across gives a figure about a third too high and looks entirely plausible. This page also works out the figure HMRC uses for payments on account, which is Income Tax plus Class 4 and deliberately excludes Class 2, student loan and Capital Gains Tax.

  1. 1Enter your turnover for the year and the expenses you can deduct — this page does not decide which expenses qualify.
  2. 2Add any other taxable income, such as a salary or rent; it shares one Personal Allowance with your profit rather than getting its own.
  3. 3Pick your student loan plan if you have one.
  4. 4Read the total, then check the payments-on-account figure if you are budgeting for January.

FAQ

Do I still pay Class 2 National Insurance?

Not as a charge. If your profits reach the small profits threshold, Class 2 is treated as having been paid and your record is protected without paying anything. Below that threshold nothing is due either, but the year will not count towards the State Pension unless you choose to pay voluntarily. That is a decision about your record rather than tax you owe, which is why it appears as an option here and not as a line in the bill.

Why is Class 4 a different rate from the National Insurance on my payslip?

Because they are different classes of contribution. Class 4 for the self-employed and Class 1 for employees happen to share the same two profit and earnings limits, but not the same rate. The shared thresholds are what make the mistake easy: a calculator that reuses the employee rate produces a bill roughly a third too high and nothing about it looks wrong.

What figure does HMRC use for payments on account?

Income Tax plus Class 4 National Insurance from the year just filed. It excludes Class 2, student loan repayments and Capital Gains Tax, which is why a payment on account can look smaller than the bill you actually paid. This page shows that figure separately so you do not have to work it out before using the payments on account calculator.

What does this calculator not do?

It does not decide which expenses are allowable, handle the trading allowance, cover partnerships, capital allowances, the cash basis versus accruals choice, or anything relating to Scotland. It also assumes a single trade and a full tax year. Those are accountancy judgements rather than arithmetic, and this page does the arithmetic.

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