Estimate your income tax and National Insurance as a UK sole trader or self-employed person for 2024/25.
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How This Works
2024/25 sole trader rates: Income tax at 20% on profits £12,571–£50,270, 40% on £50,271–£125,140, 45% above. Class 2 NI: £3.45/week if profits exceed £12,570. Class 4 NI: 9% on profits £12,571–£50,270, 2% above. Self-assessment tax return due 31 January each year. First-year traders face a "double payment" in January (tax for current year plus first payment on account).
As a rule of thumb: if your profits are consistently above £30,000–35,000, a limited company typically saves tax. Below that, the accountancy costs (£1,000–2,000/year for a Ltd vs £300–500 for sole trader) often outweigh the savings. Ltd companies offer limited liability protection, which is valuable if your work carries professional risk. Sole trader is simpler to administer — no Companies House filings, no payroll. Many people start as sole traders and incorporate as they grow.