How much tax do I pay on £40,000 as a sole trader?

About £7,131.80 for 2026/27: £5,486.00 income tax and £1,645.80 Class 4 National Insurance. Class 2 is treated as paid because the profit is above £7,105. If this is your first year with a bill over £1,000 you will also pay £3,565.90 on account towards the following year.

When is self assessment tax due?

The balancing payment for 2026/27 is due on 31 January 2028, the same day as the online return. The first payment on account for the next year is due the same day and the second on 31 July 2028. Pay late and HMRC charges interest from the due date.

Do I still pay Class 2 National Insurance?

Only if you choose to. Profit above £7,105 earns you a qualifying year for the state pension without paying anything. If your profit is below that, paying £3.65 a week voluntarily protects your pension record.

Does the calculator work for Scotland?

Yes. Select Scotland and it applies the Scottish income tax bands to your profit. National Insurance, the personal allowance and dividend rates are the same across the UK, so only the income tax line changes.

Can I reduce my payments on account?

Yes, if you expect next year’s profit to be lower you can ask HMRC to reduce them through your online account or on the return. Reduce them too far and HMRC charges interest on the shortfall. If you expect profit to rise, there is no need to do anything; the difference is collected in the balancing payment.

Self Assessment Tax Calculator

Enter your sole trader profit and see income tax, Class 2 and Class 4 National Insurance and payments on account.

A sole trader’s 2026/27 tax bill is income tax on profit above the £12,570 personal allowance (20% on the first £37,700 of taxable income, 40% up to £125,140, then 45%) plus Class 4 National Insurance at 6% on profit between £12,570 and £50,270 and 2% above that. On £40,000 of profit the bill is £7,131.80.

Estimated tax bill for 2026/27

£0.00

Income tax plus Class 4 and Class 2 National Insurance on £0.00 of income. An estimate: your return may differ.

Effective rate on total income0.0%

Personal allowance applied£12,570.00

How the bill breaks down

Item	Amount	Rate	Tax
Income tax: basic rate	£0.00	20%	£0.00
Class 4 NI: £12,570 to £50,270	£0.00	6%	£0.00
Class 2 NIVoluntary		£3.65 a week	£0.00
Total liability			£0.00

Profit is below the small profits threshold, so Class 2 is voluntary: 52 weeks at the weekly rate protects your State Pension record. A full year costs £189.80.

When to pay

Due date	Payment	Amount
31 January 2028	Balancing payment	£0.00

No payments on account: the self assessment bill is at or below the threshold. Payments on account apply when the self assessment bill is over £1,000 and less than 80% of your tax was collected at source.

Rates used for 2026/27

The personal allowance is £12,570, reduced by £1 for every £2 of income over £100,000. Bands apply to income above the allowance.

Income tax bands: England, Wales and Northern Ireland
Band	Taxable income from	To	Rate
Basic rate	£0	£37,700	20%
Higher rate	£37,700	£125,140	40%
Additional rate	£125,140	No limit	45%

Income tax bands: Scotland
Band	Taxable income from	To	Rate
Starter rate	£0	£3,967	19%
Basic rate	£3,967	£16,956	20%
Intermediate rate	£16,956	£31,092	21%
Higher rate	£31,092	£62,430	42%
Advanced rate	£62,430	£125,140	45%
Top rate	£125,140	No limit	48%

National Insurance for the self-employed 2026/27
Item	Threshold or rate
Class 4 lower profits limit	£12,570
Class 4 upper profits limit	£50,270
Class 4 main rate (between the limits)	6%
Class 4 upper rate (above the upper limit)	2%
Class 2 small profits threshold	£7,105
Class 2 voluntary weekly rate	£3.65
Payments on account threshold	£1,000

Source: GOV.UK: Self-employed National Insurance rates; GOV.UK: Income Tax rates and Personal Allowances; HMRC: Rates and allowances for National Insurance contributions; HMRC: Income Tax rates and allowances. Last updated 29 October 2026.

How to use the self assessment calculator

How is income tax on self-employed profit worked out?

Start with your profit (turnover minus allowable expenses), take off the £12,570 personal allowance, and tax what is left in bands. The allowance shrinks by £1 for every £2 of income over £100,000. Scotland has its own bands for earned income; switch the region in the calculator if you live there.

Income tax bands, rest of UK, 2026/27
Band	Taxable income	Rate
Personal allowance	Up to £12,570	0%
Basic rate	£0 to £37,700	20%
Higher rate	£37,700 to £125,140	40%
Additional rate	Over £125,140	45%

How is Class 4 National Insurance worked out?

Class 4 is 6% of profit between £12,570 and £50,270, then 2% on anything above. Class 2 is no longer compulsory: if your profit is above the £7,105 small profits threshold you are treated as having paid it, at no cost, and still build up state pension entitlement. Below that you can pay it voluntarily at £3.65 a week, £189.80 a year.

What does a £40,000 profit cost in tax?

Taxable income: £40,000 − £12,570 = £27,430
Income tax: £27,430 × 20% = £5,486.00
Class 4: (£40,000 − £12,570) × 6% = £1,645.80
Class 2: treated as paid, £0.00
Total: £7,131.80

What are payments on account?

If your bill is over £1,000 and less than 80% of your tax was deducted at source, HMRC asks for next year in advance: two payments of half this year’s bill, due 31 January 2028 and 31 July 2028. In the example above that is £3,565.90 each, on top of the £7,131.80 balancing payment due 31 January 2028. The first year therefore feels like paying one and a half years of tax at once.

What can I deduct before I enter my profit?

Business costs such as materials, software, insurance, a share of home running costs and business mileage at the approved rate. If your turnover is under the £1,000 trading allowance you can claim that instead of expenses. The calculator is an estimate for planning; your return may also include employment income, dividends or student loan repayments, which the tool lets you add as extra lines.

Frequently asked questions

How much tax do I pay on £40,000 as a sole trader?: About £7,131.80 for 2026/27: £5,486.00 income tax and £1,645.80 Class 4 National Insurance. Class 2 is treated as paid because the profit is above £7,105. If this is your first year with a bill over £1,000 you will also pay £3,565.90 on account towards the following year.
When is self assessment tax due?: The balancing payment for 2026/27 is due on 31 January 2028, the same day as the online return. The first payment on account for the next year is due the same day and the second on 31 July 2028. Pay late and HMRC charges interest from the due date.
Do I still pay Class 2 National Insurance?: Only if you choose to. Profit above £7,105 earns you a qualifying year for the state pension without paying anything. If your profit is below that, paying £3.65 a week voluntarily protects your pension record.
Does the calculator work for Scotland?: Yes. Select Scotland and it applies the Scottish income tax bands to your profit. National Insurance, the personal allowance and dividend rates are the same across the UK, so only the income tax line changes.
Can I reduce my payments on account?: Yes, if you expect next year’s profit to be lower you can ask HMRC to reduce them through your online account or on the return. Reduce them too far and HMRC charges interest on the shortfall. If you expect profit to rise, there is no need to do anything; the difference is collected in the balancing payment.

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Cite this page: “Self Assessment Tax Calculator”, SoleKit, https://solekit.co.uk/self-assessment-tax-calculator