Sole Trader Profit & Tax
Calculate your sole trader profit, Income Tax, National Insurance and what you actually keep.
Profit
£42,000
Income Tax
£5,886
National Insurance
£1,930
Net income
£34,184
How this is calculated
Revenue£50,000
Expenses−£8,000
Taxable profit£42,000
Income Tax (20%/40%/45%)−£5,886
National Insurance (Class 2 + Class 4)−£1,930
What you keep£34,184
NI breakdown for 2026/27:
Class 4: 6% on profits between £12,820 and £50,270, then 2% above.
Class 2 is now optional with a small weekly contribution.
Sole traders pay Income Tax on business profits through Self Assessment. Expenses must be wholly and exclusively for business purposes. You can also claim the £1,000 trading allowance instead of actual expenses if your income is under £1,000. VAT registration is required if turnover exceeds £90,000. This is an educational estimate only.
Assumptions
Based on 2026/27 UK tax rules for England. Tax bands: 20% to £50,270, 40% to £125,140, 45% above. Personal Allowance £12,570 (tapered above £100,000). National Insurance 8% on earnings between £12,570 and £50,270, 2% above. This is an educational estimate — not financial advice.