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
← Sole trader vs PAYE
SA · rank #1
🇬🇧Sole trader (Self Assessment)
About £40,268.20 take-home on £50k after £9,731.80 tax + NI (Self Assessment / POA).
🇬🇧
Sole trader (Self Assessment) on £50,000
On £50,000 trading profit (2026/27 rUK), a sole trader models about £40,268.20 take-home after Income Tax £7,486.00 and Class 4 NI £2,245.80.
Key takeaways
- Sole trader (Self Assessment): ≈ £40,268.20 take-home on £50,000 (tax + NI ≈ £9,731.80).
- Rank #1 of 2 on £50,000 (highest take-home first).
- Class 4 at 6% between £12,570 and £50,270, then 2% (GOV.UK self-employed NI rates).
- Usually pay Income Tax + Class 4 via Self Assessment; payments on account due 31 January and 31 July when they apply (GOV.UK).
- Compare with: PAYE.
Sole trader (Self Assessment) — overview
Trading profit through Self Assessment — Class 4 NI (and Class 2 treated as paid at/above the small profits threshold).
Class 4 at 6% between £12,570 and £50,270, then 2% (GOV.UK self-employed NI rates).
On £50,000 trading profit (2026/27 rUK), a sole trader models about £40,268.20 take-home after Income Tax £7,486.00 and Class 4 NI £2,245.80.
Headline maths on £50k
Income Tax £7,486.00; NI £2,245.80; total £9,731.80.
Take-home £40,268.20 (effective 19.46% tax+NI on profit/gross).
Payments on account estimate ≈ £4,865.90 each when POA apply.
Profit / salary ladder
The ladder recomputes both paths from £20k to £100k with the same equal-profit assumption.
Above £50,270, Class 1 and Class 4 both move to a 2% additional band — the main-band rate gap still dominates.
Official rules for this path
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
Scoreboard (£50,000)
Rank
#1
Take-home
£40,268.20
Income Tax
£7,486.00
National Insurance
£2,245.80
Effective 19.46% tax+NI. Timing: Self Assessment / POA. Trading profit through Self Assessment — Class 4 NI (and Class 2 treated as paid at/above the small profits threshold).
Payments on account estimate ≈ £4,865.90 each (31 Jan / 31 Jul) when POA apply.
Profit / salary ladder — Sole trader
| Profit / gross | Income Tax | NI | Take-home |
|---|---|---|---|
| £20,000 | £1,486.00 | £445.80 | £18,068.20 |
| £30,000 | £3,486.00 | £1,045.80 | £25,468.20 |
| £40,000 | £5,486.00 | £1,645.80 | £32,868.20 |
| £50,000 | £7,486.00 | £2,245.80 | £40,268.20 |
| £60,000 | £11,432.00 | £2,456.60 | £46,111.40 |
| £80,000 | £19,432.00 | £2,856.60 | £57,711.40 |
| £100,000 | £27,432.00 | £3,256.60 | £69,311.40 |
Compare with the other path
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.
Concepts
Same profit, same Income Tax
With identical rUK taxable income and no other adjustments, Income Tax matches — useful for isolating the NI effect.
NI rate wedge
8% Class 1 vs 6% Class 4 on the main band is the core annual gap on this vignette.
Cash-flow vs annual liability
PAYE withholds gradually; Self Assessment can concentrate cash outflows on 31 January / 31 July even when the annual bill is lower.
Employer NI is off-stage
Employer Class 1 is a business cost of hiring an employee — not subtracted from the PAYE take-home column here.
Planning notes (education, not advice)
Budget for January and July
If payments on account apply, plan cash for both dates — not only the 31 January balancing payment.
Expenses change sole-trader profit
Allowable expenses (or the £1,000 trading allowance) reduce trading profit and Class 4 — not modelled on the headline equal-profit vignette.
Status comes first
Employment status / IR35 can force PAYE treatment regardless of preferred NI class — check HMRC guidance before relying on Class 4 maths.
This is education, not advice
GOV.UK pages and this hub do not replace an accountant for contractor structuring.
Glossary
- PAYE
- Pay As You Earn — employers usually deduct Income Tax and Class 1 NI from each payday and pay HMRC.
- Self Assessment
- How most sole traders report and pay Income Tax and Class 2/4 NI (GOV.UK Self Assessment).
- Class 1 NI
- Employee contributions from earnings — Category A 8% / 2% (GOV.UK NI rates letters, 2026/27).
- Class 4 NI
- Self-employed contributions on profits — 6% then 2% (GOV.UK self-employed NI rates).
- Class 2 NI
- Treated as paid when profits ≥ £7,105. Voluntary rate £3.65/week if profits are lower (GOV.UK).
- Payments on account
- Two instalments (31 January and 31 July), each usually half of last year’s Income Tax + Class 4 bill, when the prior bill was £1,000 or more (GOV.UK).
- Personal Allowance
- £12,570 for 2026/27 (GOV.UK Income Tax rates).
- Same profit vignette
- Sole-trader trading profit set equal to PAYE gross salary so Income Tax bands match and only NI + timing differ.
FAQ — Sole trader
About £40,268.20 after £9,731.80 tax + NI.
Class 4 at 6% between £12,570 and £50,270, then 2% (GOV.UK self-employed NI rates).
Usually pay Income Tax + Class 4 via Self Assessment; payments on account due 31 January and 31 July when they apply (GOV.UK).
Rank #1 of 2 by take-home descending on the headline vignette.
PAYE.
Open /self-assessment-calculator/uk.
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