£40,000 self-employed: what you keep in 2026/27
If you're a sole trader with £40,000 of taxable profit in the 2026/27 tax year and no other income, you'll pay income tax and Class 4 National Insurance through Self Assessment. Here's the full breakdown:
| England, Wales & NI | Scotland | |
|---|---|---|
| Taxable profit | £40,000 | £40,000 |
| Income tax | £5,486 | £5,551 |
| Class 4 National Insurance | £1,646 | £1,646 |
| Total tax | £7,132 | £7,197 |
| Take-home per year | £32,868 | £32,803 |
| Per month | £2,739 | £2,734 |
| Per week | £632 | £631 |
| Effective tax rate | 17.8% | 18.0% |
| Tax on your next £100 | £26 | £27 |
At this level you're a basic rate taxpayer in England, Wales and Northern Ireland. In Scotland the bands are different, so you'll pay £65 more income tax on the same profit. National Insurance is the same everywhere in the UK.
How much to set aside
To cover your tax bill, put aside about £594 a month (18% of every pound of profit), or £600 a month in Scotland. Keeping it in a separate savings account makes January much less painful.
Because your bill is over £1,000, HMRC will usually ask for payments on account: two advance payments of about £3,566 each (31 January and 31 July) towards next year's bill, on top of this year's balance. In your first year this can mean paying around 1.5 years of tax at once, so it's worth saving ahead.
Self-employed vs employed on £40,000
An employee earning a £40,000 salary pays the same income tax but more National Insurance (8% instead of 6% in the main band), so they take home £32,320. As a sole trader you keep £549 more, mainly because you pay £549 less National Insurance.
But the comparison isn't like for like: employees also get paid holiday, sick pay and employer pension contributions worth thousands of pounds a year. If you're comparing a job offer with contracting, our contractor day rate calculator includes those costs.
How this is calculated
- Personal Allowance: the first £12,570 is tax-free (it tapers away above £100,000).
- Income tax (England, Wales & NI): 20% up to £50,270, 40% up to £125,140, 45% above.
- Scottish income tax: 19%, 20%, 21%, 42%, 45% and 48% bands.
- Class 4 NI: 6% on profits between £12,570 and £50,270, then 2%.
Want to change the numbers? Use the calculator above, or see take-home pay for every profit level.
Frequently asked questions
How much tax do I pay on £40,000 self-employed?
In 2026/27 a sole trader with £40,000 of profit pays about £5,486 income tax and £1,646 Class 4 National Insurance in England, Wales or Northern Ireland, £7,132 in total. In Scotland the total is about £7,197.
What is £40k self-employed take-home pay per month?
About £2,739 a month in England, Wales and Northern Ireland, or £2,734 a month in Scotland, after income tax and National Insurance.
Is £40,000 turnover or profit?
These figures are for £40,000 of taxable profit, which is your turnover minus allowable business expenses. If £40,000 is your turnover, enter your expenses in the calculator to see the right figure.
Do self-employed people pay less tax than employees?
They pay the same income tax but less National Insurance: 6% Class 4 instead of 8% Class 1 in the main band. In exchange they don't get paid holiday, sick pay or employer pension contributions.
Sources
- GOV.UK – Income Tax rates and Personal Allowances
- GOV.UK – Income Tax in Scotland
- GOV.UK – Self-employed National Insurance rates
This calculator gives estimates for planning only. It is not tax, legal or financial advice. Rules and fees change, so check the official source or a qualified professional before making decisions.