Rule-based calculation · sole trader · 2026/27

What a sole trader keeps

Turnover less allowable expenses is your profit; income tax and Class 4 National Insurance are charged on it using the HMRC rules for 2026/27. This page is for sole traders and partners. If you trade through a limited company, use the salary and dividends calculator: the rules are different and one page cannot honestly cover both.

Net income from the business · England, 2026/27

£2,739 a month

£32,868 a year, from a taxable profit of £40,000

Income tax and National Insurance take 17.8% of profit.

Where it goes

Item	A year	How it is worked out
Turnover	£50,000.00	As entered.
Allowable expenses	−£10,000.00	As entered. Only costs wholly and exclusively for the business count.
Taxable profit	£40,000.00	Turnover less expenses.
Income tax	−£5,486.00	Personal allowance £12,570; £27,430 of the profit is taxable, in the bands below.
Class 4 National Insurance	−£1,645.80	6% of profit between £12,570 and £50,270, 2% above.
Class 2 National Insurance	−£0.00	Treated as paid at or above £7,105 of profit; voluntary at £3.65 a week below it.
Net income	£32,868.20	Profit less everything above.

The income tax on the profit, band by band

Band	Rate	Profit taxed	Tax
Basic rate	20%	£27,430	£5,486.00

What this does not cover

Payments on account and their timing, the trading allowance, cash-basis adjustments, capital allowances, losses carried forward, student loan repayments, the High Income Child Benefit Charge, and pension tax relief. Partnerships share profit first and then each partner uses this page for their share.

Check the rules

Every rate and threshold is recorded in the registry with the page it was taken from on 2026-09-03.

Income tax: https://www.gov.uk/income-tax-rates
Self-employed National Insurance: https://www.gov.uk/self-employed-national-insurance-rates
Tax year: 2026/27, 2026-04-06 to 2027-04-05
Regime: England, Wales and Northern Ireland