Your total business income before expenses
Direct costs of producing goods or services
Rent, utilities, marketing, and other business costs
Any additional income outside your sole trader business
Percentage of net profit contributed to pension
Reg. 07380272 · England & Wales · Est. 2010
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Net Take-Home
£32,488.80
Monthly Take-Home
£2,707.40
Weekly
£624.78
Effective Rate
17.6%
Everything you need to know about sole trader taxes in the UK
What taxes does a sole trader pay?
As a sole trader in the UK, you pay income tax on your taxable profits (after deducting allowable expenses and the personal allowance), Class 2 National Insurance (a flat weekly rate of £3.45/week if profits exceed £12,570), and Class 4 National Insurance (6% on profits between £12,570 and £50,270, and 2% above £50,270). You may also have student loan repayments collected through Self Assessment. All taxes are calculated on your net profit, not your total turnover.
Turnover vs gross profit vs net profit
Turnover is your total business income before any deductions. Gross profit is your turnover minus the cost of goods sold (direct costs like materials, stock, and manufacturing costs). Net profit is your gross profit minus operating expenses (rent, utilities, marketing, insurance, professional fees, etc.). Your tax is calculated on your net profit, so maximising legitimate deductions reduces your tax bill. It is important to keep accurate records of all income and expenses.
How does the personal allowance work?
The personal allowance for 2025/26 is £12,570 -- meaning the first £12,570 of your taxable profit is tax-free. However, if your adjusted net income exceeds £100,000, your personal allowance is reduced by £1 for every £2 over £100,000, creating an effective 60% marginal tax rate in the £100,000-£125,140 range. Once income exceeds £125,140, the personal allowance is fully withdrawn. Pension contributions can help reduce your adjusted net income and preserve your personal allowance.
Self Assessment deadlines & pension planning
You must file your Self Assessment tax return by 31 January following the end of the tax year. For the 2025/26 tax year (6 April 2025 to 5 April 2026), the deadline is 31 January 2027 for online returns and 31 October 2026 for paper returns. If your tax bill exceeds £1,000, you may need to make Payments on Account. Pension contributions are one of the most tax-efficient ways to reduce your sole trader tax bill -- contributions receive tax relief at your marginal rate and can help preserve your personal allowance if you earn near £100,000.
HMRC-Aligned: This calculator uses official 2025/26 tax rates, NI thresholds, and student loan repayment plans. Actual results may vary depending on your specific circumstances. Consult an accountant for personalised advice.
This calculator uses official rates and thresholds from:
Last verified: February 2026 · Tax year 2025/26. Results are indicative — consult a qualified accountant for personalised advice.
Reviewed by M. Samiuddin Quadri, ACCA — Chartered Certified Accountant at Gladstone & Co. · Updated for the 2025/26 tax year.
Disclaimer: This calculator provides estimates based on current HMRC rates and thresholds for the 2025/26 tax year. It does not constitute professional tax, financial, or legal advice. Your actual liability may differ depending on your individual circumstances. Always consult a qualified accountant or tax adviser before making financial decisions. Read our terms