Answers · UK 2025/26

How much tax and National Insurance do I pay on £120,000 self-employed profit?

On £120,000 of self-employed taxable profit in 2026/27, you pay £39,432 Income Tax and £3,656.60 Class 4 National Insurance, keeping £76,911.40 after tax and NI. Your Personal Allowance is down to just £2,570.

Last updated: 3 July 2026Last reviewed: 3 July 2026How we verify

Full answer

For a self-employed sole trader with £120,000 of taxable profit in 2026/27, the Personal Allowance taper reduces the standard £12,570 allowance by £1 for every £2 of profit above £100,000: £20,000 above the threshold means a £10,000 reduction, leaving a Personal Allowance of just £2,570. Taxable profit is therefore £117,430, with £37,700 taxed at 20% (£7,540) and the remaining £79,730 taxed at 40% (£31,892), giving total Income Tax of £39,432. Class 4 National Insurance is charged at 6% on profit between £12,570 and £50,270 (£2,262), plus 2% on the £69,730 above £50,270 (£1,394.60), giving £3,656.60. Total deductions leave £76,911.40 after tax and National Insurance. £120,000 sits firmly inside the £100,000 to £125,140 'tax trap' band where the combination of the 40% higher rate, the vanishing Personal Allowance and 2% Class 4 National Insurance pushes the marginal deduction on each extra pound to around 62%. A pension contribution large enough to bring adjusted net income back to £100,000 would restore the full £12,570 Personal Allowance and attract tax relief at the highest marginal rate, making it one of the most efficient uses of surplus profit at this level.