How much tax should I set aside as self-employed in 2026/27?

Updated 15 October 2026

As a sole trader you pay income tax and Class 4 National Insurance on your profit: income minus allowable expenses. Nobody takes it out of your pay as you go, so you need to put money aside yourself. Here's how the 2026/27 numbers work (6 April 2026 to 5 April 2027).

The 2026/27 rates

Band	Profit (with standard allowance)	Income tax
Personal Allowance	up to £12,570	0%
Basic	£12,571 to £50,270	20%
Higher	£50,271 to £125,140	40%
Additional	over £125,140	45%

The allowance shrinks by £1 for every £2 of income over £100,000 (gov.uk). Class 4 NI is 6% on profits between £12,570 and £50,270, and 2% above that. Class 2 is treated as paid if your profits are £7,105 or more, so there's nothing to pay (gov.uk).

Worked examples (sole-trader income only)

Profit	Income tax	Class 4 NI	Total	% of profit
£20,000	£1,486	£446	£1,932	10%
£26,000	£2,686	£806	£3,492	13%
£40,000	£5,486	£1,646	£7,132	18%
£60,000	£11,432	£2,457	£13,889	23%

A simple rule: put 20-25% of every payment in a separate savings account if you're a basic-rate taxpayer, and 30%+ if you're a higher-rate one. If you also have a PAYE job, your allowance is usually used up by your salary, so every £1 of profit is taxed from the first pound.

Payments on account

If your Self Assessment bill is over £1,000, HMRC usually asks for advance payments towards next year's bill on 31 January and 31 July. Your first January bill can be far bigger than you expect. Check gov.uk.

Cut the bill legally

Claim every allowable expense. Use the SA103 categories so nothing gets missed.
Log business mileage. 2026/27 rates are 55p a mile for the first 10,000 miles.
If your expenses are under £1,000, the trading allowance may be the better option.

Estimate only, not tax advice. Figures use 2026/27 gov.uk rates for England, Wales and Northern Ireland. Check with HMRC or a qualified accountant before you file or pay.

Want these figures worked out from your own records? The UK Sole Trader Bookkeeping Spreadsheet (£9, Excel and Google Sheets) does it automatically. Or try the free calculator.