How much should I set aside for tax as a sole trader? (2026/27)

The nightmare scenario for every self-employed person: 31 January arrives, HMRC wants £8,000, and there's £1,200 in the current account. Setting money aside monthly is the fix. Here's how much.

The 30% rule (simple version)

Put aside 30% of every invoice you receive into a separate savings account. Don't touch it. That's your tax pot.

This works because at typical sole-trader profit levels, Income Tax + Class 4 NI + payments on account average out to roughly 30% of your profit. It's not exact, but it's never far wrong — and being over is a good problem.

The exact rates (2026/27)

• Personal allowance £12,570 — no tax on the first £12,570 of profit.
• Income Tax: 20% between £12,570 and £50,270 · 40% between £50,270 and £125,140 · 45% above.
• Class 4 NI: 6% between £12,570 and £50,270 · 2% above £50,270.
• Class 2 NI: voluntary from April 2024 (if profits < £6,725, pay £3.45/week to keep your state pension record).

Worked examples

Note: this excludes payments on account, which HMRC demands twice a year on top. Once you owe over £1,000, HMRC will ask for a second-half advance — effectively 150% of your first year's tax bill in year 2. The 30% rule accounts for that.

How Clok helps

Turn on Self-employed mode in Settings and Clok switches to Class 4 NI, tracks your set-aside as you invoice, and shows your rolling tax-owed estimate — no spreadsheets, no January panic.