Self-Employed Income Tax Calculator UK (2026/27)

How self-employment tax works

Your trading profit — income minus allowable business expenses — is added to any other taxable income you have and taxed through the normal Income Tax bands, exactly like employment income. There's no separate self-employed tax rate; the same bands and Personal Allowance apply, whichever type of income you have.

On top of Income Tax, self-employed profit is charged Class 4 National Insurance, currently 6% on profits between £12,570 and £50,270, and 2% above that.

Class 2 National Insurance: mostly free since 2024

Compulsory Class 2 National Insurance was abolished from April 2024. If your profit is £7,105 or more, you're automatically credited with a State Pension qualifying year at no cost — you don't pay anything. If your profit is below that threshold, Class 2 survives only as a voluntary payment of £3.65 a week, which you can choose to pay to protect your State Pension record for a low-profit year.

The £1,000 Trading Allowance

If your total trading income for the tax year is £1,000 or less, it's entirely tax-free and you don't need to declare it. If your income is higher, you can deduct the flat £1,000 allowance instead of your actual expenses, which can work out better for a small side income with low costs. You can't claim both the allowance and your actual expenses in the same tax year — use the toggle above to compare.

Self-employed taxi and private hire drivers

Most taxi and private hire drivers who aren't employed by a firm are self-employed, and are taxed under exactly the same rules as any other sole trader. Common allowable expenses include fuel, vehicle insurance, licensing and PCO/badge fees, and cleaning, alongside either simplified mileage rates or actual vehicle running costs (not both, for the same vehicle). This calculator applies equally whether your self-employment is driving, a trade, freelancing, or anything else.

Example self-employment tax calculations

These worked examples come straight from the calculator above, so the figures match exactly what you'd see entering the same numbers yourself.

Sole trader, no other income

£32,000 trading income

Profit: £26,000
Net after tax: £22,508

Taxi driver, mixed with PAYE job

£24,000 trading income

Profit: £16,000
Net after tax: £12,594

Side hustle, Trading Allowance

£4,500 trading income

Profit: £3,500
Net after tax: £2,800

Low profit, voluntary Class 2

£8,000 trading income

Profit: £5,000
Net after tax: £4,810

Frequently asked questions

How is self-employment income taxed?

Your trading profit (income minus allowable expenses) is added to any other taxable income you have and taxed through the normal Income Tax bands, exactly like employment income. On top of that, you pay Class 4 National Insurance on your profit. There's no separate 'self-employed tax rate' — the same Income Tax bands apply whether income comes from a job, self-employment, or both.

What is Class 4 National Insurance?

It's the main National Insurance charge for self-employed people, calculated on your trading profit for the year. For 2026/27 it's charged at 6% on profits between £12,570 and £50,270, and 2% above that — broadly similar in shape to employee Class 1 National Insurance, but calculated purely on your self-employment profit rather than stacking with any employment income.

Do I still need to pay Class 2 National Insurance?

For most people, no. Compulsory Class 2 National Insurance was abolished from April 2024: if your profit is £7,105 or more, you're automatically credited with a qualifying year towards your State Pension at no cost. If your profit is below that threshold, Class 2 survives only as a voluntary payment (£3.65 a week for 2026/27) — worth considering if you want to protect your State Pension record for a low-profit year.

What is the £1,000 Trading Allowance?

If your total trading income for the tax year is £1,000 or less, it's entirely tax-free and you don't need to declare it. If your income is higher, you can choose to deduct the flat £1,000 allowance instead of your actual expenses (useful if your real costs are low), or deduct your actual allowable expenses instead — whichever gives you a lower taxable profit. You can't use both in the same tax year. This is separate from, and works the same way as, the Property Allowance for rental income.

What counts as an allowable business expense?

Costs wholly and exclusively for your self-employment: stock and materials, business mileage or vehicle running costs, tools and equipment, insurance, a proportion of home costs if you work from home, and professional fees like accountancy. It doesn't include your own wages or drawings, or personal expenses not related to the business.

Do I pay this on top of tax from a job?

Yes, if you have both. Your self-employment profit and your employment income are combined for Income Tax purposes (via Self Assessment), so your profit can be taxed at a higher marginal rate if your employment income already uses up your Personal Allowance and basic-rate band. Enter your other taxable income above to see the combined effect.

Is this different for taxi and private hire drivers specifically?

No — taxi and private hire drivers who work for themselves (rather than as an employee) are taxed under exactly the same self-employment rules as any other sole trader: Income Tax and Class 4/2 National Insurance on trading profit, with the same Trading Allowance choice. Common allowable expenses for drivers include fuel, vehicle insurance, licensing and PCO/badge fees, cleaning, and a proportion of vehicle finance or depreciation, though vehicle costs have specific rules depending on whether you use simplified mileage rates or actual costs.

Methodology and assumptions

This self-employment tax calculator assumes:

You're a sole trader, not operating through a limited company. For company profit, see the Corporation Tax Calculator instead.
Income Tax is calculated using the marginal-rate method: your total tax with your profit added to your other income, minus your tax on your other income alone.
Class 4 National Insurance is calculated on your profit alone, since it doesn't stack with other income the way Income Tax does.
All figures are rounded to the nearest penny.

Sources

Tax figures for 2026/27 are taken directly from:

Further guidance referenced on this page:

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Trading income	£32,000.00
Allowable expenses	−£6,000.00
Profit	£26,000.00
Income Tax	−£2,686.00
Class 4 National Insurance	−£805.80
Class 2 National Insurance	Credited, £0
Net profit after tax	£22,508.20

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