Use cases / Self-employed
Tax for the self-employed and side hustlers
Side income under the trading allowance needs no tax return. Above it, you register for Self Assessment, pay income tax and Class 4 National Insurance on profits, and can choose between the allowance and your actual costs.
Key figures
| Figure | 2025/26 | 2026/27 |
|---|---|---|
| Trading allowance | £1,000 | £1,000 |
| Class 4 NIC main rate (on profits between limits) | 6% on £12,570 to £50,270 | 6% on £12,570 to £50,270 |
| Class 4 NIC rate above upper limit | 2% | 2% |
| Class 2 small profits threshold | £6,845 | £7,105 |
| Personal allowance | £12,570 | £12,570 |
How the rules work
Trading allowance
Gross trading income up to £1,000 a year is tax-free and needs no return. Above that, you can deduct either the £1,000 allowance or your actual allowable expenses, whichever is greater.
Income tax
Profit is taxed after the £12,570 personal allowance at 20% up to £37,700 of taxable income, 40% above that and 45% over £125,140.
Class 4 National Insurance
Profits between £12,570 and £50,270 pay 6%; profits above pay 2%. Class 2 is no longer charged, and profits above the small profits threshold still count towards your State Pension record.
Registering and paying
Register for Self Assessment by 5 October after the end of the tax year in which you started. Returns are due by 31 January online, with tax due the same day and, for larger bills, payments on account.
Figures apply to England, Wales and Northern Ireland taxpayers who are sole traders or partners.
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HMRC and GOV.UK sources
Related
General information for UK taxpayers, not personal tax advice. Figures reflect the 2025/26 and 2026/27 tax years and are checked against the same rules our calculators use.