UK sole traders pay Income Tax on profits above the Personal Allowance plus Class 2 and Class 4 National Insurance, filed annually via Self Assessment.
Estimate only - income tax bands only, does not include self-employment/social contributions, deductions, or credits. See the breakdown below for those.
| Income band | Rate |
|---|---|
| Up to £12,570 | 0% (Personal Allowance) |
| £12,571–£50,270 | 20% (Basic rate) |
| £50,271–£125,140 | 40% (Higher rate) |
| Above £125,140 | 45% (Additional rate) |
Class 4 National Insurance: 6% on profits between £12,570–£50,270, and 2% above that. Class 2 NI was effectively abolished for most from April 2024 (no longer payable if profits are above the small profits threshold, though voluntary contributions are possible).
VAT registration is mandatory once taxable turnover exceeds £90,000 in any 12-month period.
Self Assessment online filing and payment deadline: January 31 following the end of the tax year (April 5).
Source: HM Revenue & Customs (HMRC) Income Tax rates and National Insurance rates, 2025/26 tax year.. Tax rules change - verify current-year specifics with a local tax advisor before filing.