Going self-employed means no more PAYE doing the work for you. You now work out, report and pay your own Income Tax and National Insurance through Self Assessment. This guide explains what you pay, when, and how to stay on the right side of HMRC for the 2026/27 tax year (6 April 2026 to 5 April 2027).
Do you need to register?
If your self-employed income is more than £1,000 in a tax year, you need to register for Self Assessment. Below that, the £1,000 trading allowance usually means you don’t need to.
You must register by 5 October after the end of the tax year you started trading. If you started in January 2026, that’s 5 October 2026. Our guide How to tell HMRC when you have started a business walks you through it.
Your record-keeping duties start from day one, even before you register. Keep invoices, receipts and bank statements for at least five years after the 31 January filing deadline.
How much Income Tax do you pay?
You pay Income Tax on your profit, not your takings. Profit is your income minus your allowable business expenses. For 2026/27 in England, Wales and Northern Ireland:
| Band | Taxable income | Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 to £50,270 | 20% |
| Higher rate | £50,271 to £125,140 | 40% |
| Additional rate | Over £125,140 | 45% |
Your Personal Allowance reduces by £1 for every £2 of income over £100,000, and is lost entirely at £125,140. Scotland has its own bands.
If you also have a job, pensions, rental income, savings interest or dividends, these all use up your allowance and bands too. We look at everything together so nothing is taxed twice or missed.
What National Insurance do you pay?
Since April 2024, most self-employed people no longer pay Class 2 National Insurance. For 2026/27:
- Profits of £7,105 or more: Class 2 is treated as paid automatically. You still build your State Pension record, but you pay nothing.
- Profits under £7,105: you can choose to pay voluntary Class 2 at £3.65 a week to protect your State Pension record.
- Class 4: 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270.
A quick example
Sam is a sole trader with £30,000 profit in 2026/27 and no other income.
- Income Tax: 20% × (£30,000 − £12,570) = £3,486
- Class 4 NI: 6% × (£30,000 − £12,570) = £1,045.80
- Class 2: treated as paid, so £0
- Total: £4,531.80
When do you pay?
Your online tax return and any tax due are both due by 31 January after the end of the tax year. For 2026/27, that’s 31 January 2028. Paper returns are due by 31 October.
Once your bill is over £1,000, HMRC will usually ask for payments on account: two advance payments towards next year’s bill, due 31 January and 31 July. Your first year can feel expensive because of this, so it’s worth planning for.
Making Tax Digital is here
From April 2026, sole traders and landlords with qualifying income over £50,000 must keep digital records and send quarterly updates to HMRC. The threshold drops to £30,000 from April 2027 and £20,000 from April 2028. Read our guide Making Tax Digital for Income Tax.
Should you become a limited company?
Once profits grow, a limited company can sometimes save tax, though it brings more admin. Our guide Employed, self-employed or limited company? compares the options, or get in touch and we’ll run the numbers for you.
Need a hand? Everyday Accountants can register you with HMRC, keep your records MTD-ready and file your return on a fixed monthly fee. Get in touch for a free, no-obligation quote.
Information correct for the 2026/27 tax year at the time of writing.
Related guides: HMRC late filing and late payment penalties | Do you need a UTR number? | 10 ways you could be due a tax refund
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Need help? See our tax services, or get in touch for a free, no-obligation chat.