Short answer: as a UK sole trader you’ll usually pay Income Tax and National Insurance (Class 4) via Self Assessment. If last year’s bill was over £1,000, HMRC will also ask for Payments on Account in January and July, that’s why January can feel bigger than expected. GOV.UK
Free tool: Get our simple workbook to estimate your bill, see your take-home, and auto-calculate a weekly set-aside in your 52-week plan.
Download the Excel: Heights Sole Trader Tax & Cashflow Tool (2025/26)
The moving parts (in plain English)
- Income Tax (England, Wales & Northern Ireland) — Standard Personal Allowance £12,570. Basic rate 20% up to £50,270 taxable income, 40% to £125,140, then 45% above that. GOV.UK
- Income Tax (Scotland) — Different bands/rates apply (Starter 19%, Basic 20%, Intermediate 21%, Higher 42%, Advanced 45%, Top 48%) for 2025/26. If you’re Scottish-resident for tax, use those bands. GOV.UK
- National Insurance (self-employed) — For 2025/26, Class 4 is due at 6% on profits between £12,570–£50,270, then 2% above £50,270. Class 2 does not need to be paid if your profits are at least £6,845; if profits are below £6,845 you can choose to pay Class 2 voluntarily at £3.50/week to protect your record. GOV.UK
- Payments on Account (POA) — Payments towards your next bill (including Class 4 NI) are normally half + half of last year’s bill, due 31 January and 31 July. GOV.UK
- Pay weekly or monthly (optional) — You can set up a Budget Payment Plan Direct Debit to chip away at your next Self Assessment bill through the year. GOV.UK
Why January bites: On 31 January you often pay (a) the balancing payment for last year plus (b) your first POA for the current year; the second POA is due 31 July. GOV.UK
Worked examples (England, Wales &Northern Ireland), tax, NI and take-home
Assumptions: profits after allowable expenses; no other income; 2025/26 rates; Class 4 at 6%/2%; Class 2 not payable at these profit levels under 2025/26 rules; Personal Allowance £12,570. Rounded.
Example A — £20,000 profit
| Component | Calculation | Amount |
|---|---|---|
| Income Tax | (£20,000 − £12,570) × 20% | £1,486.00 |
| Class 4 NI | (£20,000 − £12,570) × 6% | £445.80 |
| Total tax & NI | £1,931.80 | |
| Take-home | £20,000 − £1,931.80 | £18,068.20 |
| Suggested weekly set-aside | £1,931.80 ÷ 52 | £37.15 |
Example B — £40,000 profit
| Component | Calculation | Amount |
|---|---|---|
| Income Tax | (£40,000 − £12,570) × 20% | £5,486.00 |
| Class 4 NI | (£40,000 − £12,570) × 6% | £1,645.80 |
| Total tax & NI | £7,131.80 | |
| Take-home | £40,000 − £7,131.80 | £32,868.20 |
| Suggested weekly set-aside | £7,131.80 ÷ 52 | £137.15 |
Example C — £80,000 profit
| Component | Calculation | Amount |
|---|---|---|
| Income Tax | (£37,700 × 20%) + (£29,730 × 40%) | £19,432.00 |
| Class 4 NI | (£37,700 × 6%) + (£29,730 × 2%) | £2,856.60 |
| Total tax & NI | £22,288.60 | |
| Take-home | £80,000 − £22,288.60 | £57,711.40 |
| Suggested weekly set-aside | £22,288.60 ÷ 52 | £428.63 |
Prefer to see your own numbers? Pop your profit into the Excel and it will calculate your tax, NI, take-home, and weekly set-aside automatically.
Download the Excel: Heights Sole Trader Tax & Cashflow Tool (2025/26)
Scottish-resident taxpayers: swap the Income Tax line for Scottish bands; Class 4 NI and POA rules are UK-wide. GOV.UK
Payments on Account, the timeline to plan around
- 31 January: balancing payment for last year + first POA (50%).
- 31 July: second POA (50%).
- If your current-year profits are lower, you can ask HMRC to reduce POA; if profits rise, expect a top-up next 31 January. GOV.UK
Make it painless: switch on HMRC’s Budget Payment Plan so a weekly/monthly Direct Debit quietly reduces the bill during the year — then match that with a weekly set-aside in your 52-week cashflow forecast. GOV.UK
Keep the records that make tax easy (and avoid penalties)
Doing your own books? Use our DIY Bookkeeping Checklist (UK 2025/26): Minimum You Must Do to Stay Compliant — it pairs neatly with the 52-week cashflow forecast method so your figures are tidy and your tax pot stays intact. (Internal guides: “DIY Bookkeeping Checklist (UK 2025/26)” and “52-week cashflow forecast: how to ring-fence tax money”.)
Quick FAQs
When is my 2025/26 bill due?
Pay by 11:59pm on 31 January 2026. If you make Payments on Account, the second instalment is due 31 July 2026. GOV.UK
Do I still pay Class 2?
If profits are £6,845+ you don’t have to pay Class 2; if below £6,845, you can pay voluntarily at £3.50/week to protect your record. GOV.UK
How much should I put aside each week?
Estimate your Income Tax + Class 4 for the year and divide by 52. Use HMRC’s Budget Payment Plan so the pot pays down the bill before the deadlines. GOV.UK
Related Heights guides (next best reads)
- 52-week cashflow forecast: how to ring-fence tax money
- Student loan repayments (Plan 1/2/4 + PG) explained — add the right % to your weekly set-aside if it applies
- DIY Bookkeeping Checklist (UK 2025/26): Minimum You Must Do to Stay Compliant
- MTD for ITSA Explained (UK 2025/26): Do You Need to Join in 2026 and What Changes?
Book a 20-minute planning call
Want us to run your numbers, set your weekly set-aside, and map a POA-proof cash plan? Book a quick call and we’ll build it with you in your 52-week forecast — using the Excel above as a starting point.
Sources (GOV.UK)
- Income Tax rates & Personal Allowance (EW&NI) — GOV.UK. GOV.UK
- Scottish Income Tax: 2025/26 rates and bands — GOV.UK “Scottish income tax” and HMRC employer thresholds page. GOV.UK
- Self-employed NI (Class 2 & Class 4) — GOV.UK. GOV.UK
- Payments on Account (what/when) — GOV.UK. GOV.UK
- Budget Payment Plan (pay weekly/monthly) — GOV.UK. GOV.UK
- Self Assessment deadlines (31 January / 31 July) — GOV.UK. GOV.UK