Self-Employment Tax UK Guide 2026
Navigate your sole trader taxes with confidence. Understand Income Tax, National Insurance, allowable expenses, and the latest Making Tax Digital (MTD) rules.
Master Your Self-Employed Taxes
Running your own business means you are responsible for calculating and paying your own taxes. This guide breaks down exactly what you need to know for the 2026/27 tax year.
Your 2026 Tax Action Plan
Essential steps to stay compliant and maximise your take-home pay.
Register for Self Assessment
If you earned over £1,000 from self-employment between 6 April 2025 and 5 April 2026, you must register with HMRC as self-employed. The deadline for registration is 5 October 2026.
Track Allowable Expenses
You only pay tax on your profits (income minus allowable expenses). Keep meticulous records of business costs like office supplies, travel, marketing, and a portion of your home utilities.
Understand National Insurance
While mandatory Class 2 NI was abolished, you should consider voluntary contributions to protect your State Pension. You will still pay Class 4 NI at 6% on profits between £12,570 and £50,270, and 2% above that.
Prepare for Making Tax Digital (MTD)
From April 2026, sole traders with gross income over £50,000 must use MTD-compatible software to keep digital records and submit quarterly updates to HMRC, replacing the annual paper-based approach.
2026/27 Key Deadlines
Don’t miss these critical HMRC dates
5 October 2026
Deadline to register for Self Assessment if you were self-employed in the 2025/26 tax year.
31 October 2026
Deadline for submitting paper Self Assessment tax returns for the 2025/26 tax year.
31 January 2027
Deadline for online tax returns and paying any tax owed for the 2025/26 tax year. Also the deadline for the first Payment on Account for 2026/27.
31 July 2027
Deadline for the second Payment on Account for the 2026/27 tax year.
2026/27 Tax Rates & Allowances
A standardised overview of the income tax and National Insurance thresholds applicable to self-employed individuals for the 2026/2027 tax year.
| Tax / Contribution | Profit / Income Band | Rate / Allowance | Notes |
|---|---|---|---|
| Up to £12,570 | 0% (Tax-Free) | Personal Allowance. Tapers by £1 for every £2 earned over £100,000. | |
| £12,571 – £50,270 | 20% | Basic Rate Income Tax on taxable profits. | |
| £50,271 – £125,140 | 40% | Higher Rate Income Tax on taxable profits. | |
| Above £125,140 | 45% | Additional Rate Income Tax on taxable profits. | |
| Profits ≥ £6,725 | Voluntary (£3.45/week) | Mandatory Class 2 is abolished. Voluntary contributions protect State Pension. | |
| £12,570 – £50,270 | 6% | Class 4 National Insurance on profits in this band. | |
| Above £50,270 | 2% | Class 4 National Insurance on all profits above this threshold. |
Self-Employment Tax FAQ
Answers to the most frequently asked questions about UK sole trader taxes, expenses, and HMRC compliance.
For the 2026/27 tax year, the Personal Allowance remains frozen at £12,570. You can earn up to this amount in profits before paying Income Tax. Additionally, you can earn up to £1,000 tax-free through the Trading Allowance if your gross income is below this threshold, meaning you may not even need to file a tax return.
Mandatory Class 2 National Insurance contributions were abolished from April 2024. However, self-employed individuals can still choose to make voluntary Class 2 contributions to protect their entitlement to the State Pension and certain bereavement benefits, provided their profits are above the Small Profits Threshold (£6,725).
For the 2026/27 tax year, Class 4 National Insurance is charged at 6% on profits between £12,570 and £50,270, and 2% on all profits above £50,270. You do not pay Class 4 NI on profits below the Lower Profits Limit (£12,570).
MTD for Income Tax requires sole traders and landlords with gross income over £50,000 to keep digital records and submit quarterly updates to HMRC using approved software, starting from April 2026. Those earning between £30,000 and £50,000 will join the scheme in April 2027. It replaces the traditional annual Self Assessment summary with regular digital check-ins.
Yes, if you work from home, you can claim a portion of your household bills (heating, electricity, council tax, and internet) as allowable expenses. You can either calculate the exact proportion based on rooms used and hours worked, or use HMRC’s simplified flat-rate expenses based on the number of hours worked from home each month.