Freedom Isn’t Free UK Personal Finance
Self-Employed
Self-Employed Tax UK: What You Actually Owe
A sole trader pays Income Tax and Class 4 National Insurance on profits. Your marginal rate in the basic-rate band is not 20% but 26%: 20% Income Tax plus 6% Class 4 NIC. The first GBP 12,570 of profit is tax-free under the Personal Allowance.
Self-employed tax on GBP 45,000 profit (2026/27, England/Wales/NI)
| Line | Amount |
|---|---|
| Profit for the year | GBP 45,000 |
| Less Personal Allowance (tax-free) | - GBP 12,570 |
| Income taxed at basic rate (20%) | GBP 32,430 |
| Income Tax due | GBP 6,486.00 |
| Class 4 NIC at 6% (profits GBP 12,570 to GBP 50,270) | GBP 1,945.80 |
| Class 2 NIC (treated as paid above GBP 7,105) | GBP 0 |
| Total Income Tax plus Class 4 NIC | GBP 8,431.80 |
| Effective rate on GBP 45,000 | 18.7% |
| Marginal rate on the next pound | 26% |