How Do I Pay Myself as a UK Sole Trader?
Sole traders take drawings, not a salary. You pay Income Tax and Class 4 NI on profit, not on what you withdraw. Here is how it works, with an example.
Quick answer
A sole trader does not pay themselves a salary. You move money from the business to yourself as drawings, whenever and however much you like. You are taxed on the profit the business makes, not on the amount you draw, and the bill is settled through Self Assessment, including payments on account on 31 January and 31 July.
Do sole traders pay themselves a salary?
No. A sole trader and the business are the same legal person, so there is no employer to pay you a wage. HMRC's own guidance says you keep all the profits after paying tax, and that it uses your Self Assessment return to work out the Income Tax and National Insurance you owe, based on your profits.
You pay yourself by transferring money from the business account to your personal account. These transfers are called drawings. There is no payslip, no PAYE and no minimum or maximum.
Are drawings taxed?
Drawings are not taxed and they are not a cost of the business. You pay tax on the profit, which is your income minus allowable expenses. HMRC's Self Assessment notes for the self-employed say the costs you claim do not include your own salary, wages or drawings.
So the taxable figure is the same whether you draw £2,000 or £20,000 in a month. If you draw less than you earn, you still owe tax on the full profit. If you draw more than you earn, you do not get a tax reduction.
What do I actually pay tax on?
Three things, all worked out on your profit for the tax year (6 April to 5 April):
- Income Tax. For 2026-27 the Personal Allowance is £12,570. The next band is taxed at 20% up to £50,270, then 40% up to £125,140, then 45%. The allowance reduces by £1 for every £2 of adjusted net income over £100,000. These are the rates for England, Wales and Northern Ireland, and Scotland sets its own.
- Class 4 National Insurance. You pay it on profits over £12,570: 6% up to £50,270 and 2% above that.
- Class 2 National Insurance. If your profits are £7,105 or more, Class 2 is treated as paid and you do not pay it. Below that you can choose to pay voluntarily at £3.65 a week to protect your record.
The Class 2 and Class 4 figures are on HMRC's self-employed National Insurance page and the Income Tax bands are on the Income Tax rates page. Our guide on how much National Insurance a sole trader pays goes deeper on the classes.
What does the bill look like? A worked example
This is an illustration using the 2026-27 England rates above, not advice. Say your profit is £40,000 and you have no other income.
| Item | Working | Amount |
|---|---|---|
| Income Tax | (£40,000 minus £12,570) at 20% | £5,486.00 |
| Class 4 NI | (£40,000 minus £12,570) at 6% | £1,645.80 |
| Total bill | £7,131.80 |
Whether you drew £15,000 or £35,000 during the year, the bill is the same.
How do payments on account work?
Payments on account are advance payments towards your next Self Assessment bill, and they include Class 4 NI. This catches many new sole traders out, because the first full bill comes with an extra demand.
HMRC's rules:
- Each of the two payments is half of the tax you owed for the previous year.
- They are due by midnight on 31 January and 31 July.
- A balancing payment covers any difference, due on the next 31 January.
- You do not make them if last year's bill was under £1,000, or more than 80% of your tax was collected another way, such as through your tax code.
- If you made no payments on account last year, you pay the full bill for the previous year by 31 January, plus your first payment on account.
In our example, the first January brings £7,131.80 for the year just ended plus a first payment on account of £3,565.90, so £10,697.70 in one go. The second payment on account of £3,565.90 follows by 31 July. If you expect a lower profit next year, you can ask HMRC to reduce the payments online or on form SA303. If the final bill turns out higher you are charged interest on the shortfall. HMRC explains this on its payments on account page.
How much should I set aside for tax?
The right figure depends on your profit, your other income and whether you have student loan repayments, so there is no official percentage. A safe habit is to work out your estimated tax from year-to-date profit each month and move that amount into a separate savings account as you earn. Then drawings come out of what is left.
Do I need to register and file?
You must register for Self Assessment as a sole trader if you earn more than £1,000 in a tax year. For the 2025-26 tax year HMRC's deadlines page gives 5 October 2026 to register if you have not filed before, 31 January 2027 for an online return and for payment, and 31 July for the second payment on account. If your qualifying income is over £30,000, Making Tax Digital for Income Tax applies from 6 April 2027, which means digital records and quarterly updates. Our guide explains whether you need to file a Self Assessment return.
When does a limited company make more sense?
If you form a limited company you become an employee and shareholder of it. You can then take a salary and dividends, and the company pays Corporation Tax on its profit. That brings payroll and company accounts, so it is a different way of paying yourself, not a free upgrade. The sole trader route is simpler, and many people stay on it. If you are weighing the two, the figures in our Autumn Budget 2026 guide show what is changing next.
Related guides
- How much National Insurance does a sole trader pay
- What expenses can a sole trader claim
- Accounting for sole traders
Frequently asked questions
Can a sole trader pay themselves a wage through payroll?
No. A sole trader is not an employee of their own business, so there is no wage and no PAYE for yourself. You take drawings and pay tax through Self Assessment.
How often can I take drawings?
As often as you like. There is no rule on timing or amount. Your tax depends on profit, not on withdrawals.
Can I deduct my drawings as an expense?
No. HMRC's Self Assessment notes say the costs you claim do not include your own salary, wages or drawings.
Do I pay National Insurance on my drawings?
No. Class 4 is charged on your profits over £12,570, not on what you take out. Class 2 is treated as paid if profits are £7,105 or more.
What if I draw more than I earn?
You can, for example from savings you put in or from an earlier good year. Your tax is still based on profit, so you do not pay less, and your business account needs the cash to cover it.
When are my Self Assessment payments due?
Payments on account fall on 31 January and 31 July, and the balancing payment and online return for the tax year just ended are due on 31 January.
Do I need a separate business bank account?
Keeping business money apart from personal money makes your profit, your expenses and your drawings easy to see, which helps when you work out the tax bill.
Finn, the AI accountant in AccountsOS, can sort your business transactions into categories and keep your deadlines in view, so your profit is clear when the tax bill arrives.