Answers · UK 2025/26

How much tax and National Insurance does a self-employed person pay on £55,000 profit?

A self-employed person with £55,000 taxable profit in 2026/27 pays £9,432 Income Tax and £2,356.60 Class 4 National Insurance, keeping £43,211.40 after tax and NI -- around £670 more than an employee on the same £55,000 gross salary.

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On £55,000 taxable profit for 2026/27, Income Tax is calculated the same way as for an employee: taxable income after the £12,570 Personal Allowance is £42,430, with £37,700 taxed at 20% (£7,540) and the remaining £4,730 at 40% (£1,892), giving total Income Tax of £9,432. Class 4 National Insurance is charged at 6% on profits between the £12,570 Lower Profits Limit and the £50,270 Upper Profits Limit (6% of £37,700 is £2,262), plus 2% on profits above the Upper Profits Limit (2% of £4,730 is £94.60), totalling £2,356.60. Combined deductions of £11,788.60 leave £43,211.40 after tax and National Insurance. An employee on a £55,000 salary pays the same £9,432 Income Tax but £3,050.60 employee Class 1 National Insurance (8% up to the Upper Earnings Limit plus 2% above it), keeping £42,517.40 -- so the self-employed person keeps about £694 more, reflecting the lower National Insurance rates on self-employment income. At £55,000 profit, some sole traders begin to consider whether incorporating as a limited company would be more tax-efficient, since a company structure allows a mix of a modest salary and dividends (taxed at lower rates than Income Tax, with a £500 dividend allowance) -- though incorporation brings additional compliance costs and Corporation Tax obligations that need to be weighed against any potential tax saving.