A sole trader does not have a salary, and that is not pedantry: it changes the arithmetic. What you are taxed on is PROFIT, which is your income less your allowable expenses, and there is no payroll to take the deductions as you go. On £30,000 of profit the deductions are £3,486.00 of Income Tax and £1,045.80 of Class 4 National Insurance, leaving £25,468.20, against £25,119.60 for an employee on the same £30,000. The self-employed keep £348.60 more at that level, and the gap is entirely the National Insurance rate.
The two deductions, and where they differ from a payslip
Income Tax works exactly as it does for an employee: the £12,570 Personal Allowance, then 20% to £50,270, 40% to £125,140 and 45% above, charged on profit rather than on pay. National Insurance does not. A sole trader pays Class 4 at 6% on profits between £12,570 and £50,270 and 2% above, where an employee pays Class 1 at 8% and 2% on the same thresholds. Class 2 is treated as paid automatically to protect your record where profits are £7,105 or more, at £3.65 a week for 2026 to 2027. That two-point difference in the main band is the whole of the self-employed advantage.
The same profit at four levels
£25,000 of profit keeps £21,768.20 after £2,486.00 of Income Tax and £745.80 of Class 4, 87.1% of profit. £30,000 keeps £25,468.20, 84.9%. £50,000 keeps £40,268.20, 80.5%. £60,000 keeps £46,111.40, 76.9%. Against the employed figures on the same gross, £21,519.60, £25,119.60, £39,519.60 and £45,357.40, the sole trader is ahead by £248.60, £348.60, £748.60 and £754.00. The advantage grows to the upper earnings limit and then stops growing, because above £50,270 both rates are 2%.
Why it is not paid as you go
There is no payroll, so nothing is deducted at the time. Instead you file a return and pay, with payments on account for the following year where the bill is large enough, which means a first full year of self-employment can produce a bill of one and a half years' tax at once. The practical consequence is that the figures above are not what lands in your account each month: the whole of the profit does, and the deduction comes later. Setting aside the percentage this page gives you, monthly, is what makes the arrangement work.
What counts as profit, which is the part worth getting right
Income less ALLOWABLE expenses, which are costs incurred wholly and exclusively for the business. That includes materials, tools, business insurance, professional fees, a proportion of a home used as an office, and mileage at the approved rates. It does not include anything with a private element unless the business proportion can be identified. Getting the expenses right moves the number far more than any rate does: £2,000 of expenses on a £30,000 turnover is worth £560 in the pocket at the basic-rate marginal 26%, and that marginal rate is the real figure to think with.
Where the comparison stops being fair
The sole trader keeps more of the same headline figure and gets less: no employer pension contribution, no statutory sick pay, no paid holiday, no redundancy rights, and Class 4 builds no entitlement of its own, which is why Class 2 exists to protect the State Pension record. An employee on £30,000 with a 3% employer pension contribution receives £900 a year the sole trader has to fund themselves out of the £348.60 advantage. Compare the two on total value rather than on net alone, or the arithmetic flatters the wrong side.
Questions people ask about self employed salary calculator
What does a self-employed person keep on £30,000?
£25,468.20 of £30,000 of profit in 2026/27: £3,486.00 of Income Tax and £1,045.80 of Class 4 National Insurance. An employee on the same £30,000 keeps £25,119.60.
What is Class 4 National Insurance?
6% on profits between £12,570 and £50,270 and 2% above, charged on profit rather than on pay. Class 2, £3.65 a week for 2026 to 2027, is treated as paid where profits are £7,105 or more, to protect your record.
Why do the self-employed pay less National Insurance?
Class 4 is 6% in the main band against Class 1's 8%, and there is no employer contribution behind it. Above the upper earnings limit both are 2%, so the advantage stops growing there.
Do I pay tax monthly if I am self-employed?
No. There is no payroll, so the whole of your profit reaches you and the bill comes later through self assessment, with payments on account where it is large enough. Setting the deduction aside monthly is what makes it manageable.