PAYE
£39,519.60
£50k · PAYE · rank #2
- Income Tax
- £7,486.00
- NI
- £2,994.40
- Timing
- PAYE each payday
Sole trader vs PAYE
Compare · 2026
PAYE vs Sole trader
PAYE employee vs Sole trader (Self Assessment): £39,519.60 vs £40,268.20 take-home on £50,000. On £50,000, Sole trader (Self Assessment) models about £40,268.20 vs £39,519.60 — about £748.60 more take-home. Income Tax matches; NI differs by about £748.60.
Higher take-home on £50k
Sole trader (Self Assessment) models more take-home
£40,268.20 vs £39,519.60, a £748.60 difference (NI gap ≈ £748.60).
Side-by-side scoreboard
Sole trader
£40,268.20
£50k · SA · rank #1
- Income Tax
- £7,486.00
- NI
- £2,245.80
- Timing
- Self Assessment / POA
Key takeaways
- On £50,000, Sole trader (Self Assessment) models about £40,268.20 vs £39,519.60 — about £748.60 more take-home. Income Tax matches; NI differs by about £748.60.
- Income Tax on both sides is £7,486.00 at £50k (rUK engine) — the gap is National Insurance.
- Class 1 Category A: 8% between £12,570 and £50,270, then 2% (GOV.UK NI rates and categories).
- Class 4 at 6% between £12,570 and £50,270, then 2% (GOV.UK self-employed NI rates).
- Income Tax and Class 1 NI are usually deducted from each payday under PAYE — no Self Assessment payments on account on this vignette.
- Usually pay Income Tax + Class 4 via Self Assessment; payments on account due 31 January and 31 July when they apply (GOV.UK).
How to read PAYE vs Sole trader
Both columns use the same £50,000 figure as sole-trader profit or PAYE gross salary for tax year 2026/27 (rUK).
Sole trader (Self Assessment) is ahead by about £748.60 — driven by ~£748.60 less National Insurance, not a different Income Tax bill.
National Insurance gap
Class 1 employee main rate is 8%; Class 4 main rate is 6% on the same-style band between £12,570 and £50,270 (GOV.UK).
That rate difference is why sole-trader take-home is higher on this vignette when profit equals PAYE gross.
Payment timing
PAYE: Income Tax and Class 1 NI are usually collected through the payroll each payday.
Self Assessment: payments on account are each half of last year’s Income Tax + Class 4 bill, due 31 January and 31 July, unless the prior bill was under £1,000 or more than 80% was collected outside SA (GOV.UK).
Contractor caveats
This hub compares tax maths only. IR35 / off-payroll, umbrella PAYE, limited company dividends, and deductible expenses can change the commercial result.
Employer Class 1 NI is an employer cost — it is not deducted from the employee take-home shown here.
Official rules behind this compare
Self-employed Class 4 NI (2026/27)
- Class 2 treated as paid at profits ≥ £7,105
- Class 4 6% on profits over £12,570 up to £50,270
- Class 4 2% on profits over £50,270
- Voluntary Class 2 £3.65/week if profits are below the small profits threshold
Employee Class 1 NI (2026/27)
- Category A: 0% to primary threshold, then 8% to UEL, then 2%
- Annual primary threshold £12,570; UEL £50,270
- Employer NI is separate and not deducted from employee take-home on this hub
Payments on account
- Each instalment is usually half of last year’s tax (including Class 4)
- Due by midnight on 31 January and 31 July
- Not required if last year’s bill was less than £1,000
- Also not required if more than 80% of last year’s tax was paid outside Self Assessment
Income Tax (rUK)
- Personal Allowance £12,570 for 2026/27
- Same rUK band schedule applies to PAYE employment and sole-trader trading profit on this hub
Profit ladder — take-home gaps
| Profit / gross | PAYE | Sole trader | Gap |
|---|---|---|---|
| £20,000 | £17,919.60 | £18,068.20 | £148.60 |
| £30,000 | £25,119.60 | £25,468.20 | £348.60 |
| £40,000 | £32,319.60 | £32,868.20 | £548.60 |
| £50,000 | £39,519.60 | £40,268.20 | £748.60 |
| £60,000 | £45,357.40 | £46,111.40 | £754.00 |
| £80,000 | £56,957.40 | £57,711.40 | £754.00 |
| £100,000 | £68,557.40 | £69,311.40 | £754.00 |
Myths vs facts
“Sole traders always pay more tax than employees.”
On this £50k vignette the sole trader models higher take-home (£40,268.20 vs £39,519.60) because Class 4 is lower than Class 1 employee NI — Income Tax is the same.
“Class 2 still costs £3.65/week for everyone.”
At profits ≥ £7,105, Class 2 is treated as paid (no Class 2 cash due). The £3.65/week rate is for voluntary Class 2 below that threshold (GOV.UK).
“Self Assessment means you only pay once a year.”
When payments on account apply you usually pay twice a year (31 January and 31 July), plus any balancing payment — not a single annual lump for every trader (GOV.UK).
“PAYE and Self Assessment use different Income Tax rates.”
rUK Income Tax bands are the same. This hub’s gap is National Insurance and cash-flow timing, not a different basic/higher rate schedule.
“Umbrella / IR35 inside IR35 equals sole-trader Class 4.”
Off-payroll / umbrella engagements are usually taxed like employment (PAYE + Class 1). Status rules are outside this model — check HMRC employment status guidance.
Exclusions
- IR35 / off-payroll working and umbrella company fees
- Limited company corporation tax and dividends
- Allowable expenses and the £1,000 trading allowance on the headline vignette
- Student loans, pensions, Gift Aid, Scottish Income Tax
- Employer Class 1 National Insurance
- Voluntary Class 2 elections below the small profits threshold
FAQ
Sole trader (Self Assessment) by about £748.60 (£40,268.20 vs £39,519.60).
Not on this vignette — both use the same rUK Income Tax engine on £50,000, so Income Tax is £7,486.00 either way.
Employees pay Class 1 (8% / 2%). Sole traders pay Class 4 (6% / 2%). Class 2 is treated as paid at profits ≥ £7,105.
PAYE usually deducts tax and NI each payday. Sole traders usually settle via Self Assessment, with payments on account on 31 January and 31 July when they apply (GOV.UK).
Related
Switch paths
Compare sole trader vs PAYE
Same £50,000 profit/gross — NI + payment timing.
Validation notes
- £50k Income Tax matches on both paths: £7,486.00.
- £50k Class 4 ≈ £2,245.80; Class 1 ≈ £2,994.40.
- £50k take-home: sole trader £40,268.20; PAYE £39,519.60.
- Class 4 = (profit − £12,570) × 6% while profit ≤ £50,270 (GOV.UK).
- Class 1 Category A main band 8% between PT and UEL (GOV.UK NI rates letters).
- Engines: calculateSelfAssessmentUk + calculateUKTaxDetailed (same as live calculators).
By Sammy S. · Founder · AuthorUpdated for 2026