How to pay yourself as a sole trader in the UK

A sole trader doesn't get a payslip. Money lands in your business account, and you move some of it to yourself whenever you like. That freedom is the problem. Most people just spend from the pot and hope there's enough left for tax.

Here's how to pay yourself as a sole trader in the UK without that worry. Five steps you can set up this week.

How to pay yourself as a sole trader: the basic idea

You and your business are the same legal person. So you don't pay yourself a salary. You take money out of the business, often called "drawings".

Drawings aren't an expense. You're taxed on your profit, which GOV.UK describes as your self-employed income minus allowable expenses. So it doesn't matter whether you took £500 out or £5,000. The tax depends on what the business made.

That's why the order matters. Tax comes out first. What's left is yours to take.

Step 1: Keep business and personal money apart

Open a separate account for the business if you haven't. It doesn't have to be a "business" account. It just has to be separate. I wrote about the choice in do you need a business bank account as a sole trader.

When every customer payment lands in one place, you can see what the business earned. When you pay yourself, you move money out in one clear transfer.

Step 2: Work out your tax rate

Use the current rates. For 2026 to 2027, GOV.UK's Income Tax rates page lists a Personal Allowance of £12,570 at 0%. Income from £12,571 to £50,270 is taxed at 20%. Income from £50,271 to £125,140 is taxed at 40%.

You also pay Class 4 National Insurance. GOV.UK says that's 6% on profits over £12,570 up to £50,270, and 2% above that. If your profits are £7,105 or more, Class 2 is treated as paid, so you don't pay it.

Here's an example. Say you're a tutor and your profit for the year is £30,000.

• Income Tax: £30,000 minus £12,570 is £17,430. At 20%, that's £3,486.
• Class 4 National Insurance: 6% of £17,430 is £1,045.80.
• Total: £4,531.80.

That's about 15% of your profit. These are my sums from the published rates, not an HMRC quote. Your own bill depends on other income, pension payments and so on. HMRC offers a tax estimator, linked from GOV.UK's sole trader guide, if you want a check.

Step 3: Set aside tax every time you get paid

Don't wait until the end of the month. When a customer pays you, move a fixed share into a tax pot straight away.

In the tutor example, 15% would cover it. I'd round up to 20%, because you can't be sure what the year will look like and extra savings never hurt. If you end up with spare, that's a nice surprise in January.

Put the tax pot in its own savings account. If you can't see it in your current account, you won't spend it. I covered this in more detail in how to save for tax when you're self-employed.

Step 4: Pick a regular drawing

Irregular income makes people nervous, so pay yourself a steady amount instead. Look at the last three to six months. Take a number you know the business can cover even in a quiet month.

Say your business brings in £3,000 a month after expenses. You set aside 20% for tax, which is £600. That leaves £2,400. Instead of taking whatever's left each week, you pay yourself £2,000 on the same day each month. The extra £400 stays in the business account as a buffer.

In a good month, the buffer grows. In a quiet month, it covers you. That's the whole trick. You've given yourself a salary, even though the law doesn't require one.

Step 5: Record every drawing and every tax transfer

Keep a note of each transfer you make to yourself, and each one into the tax pot. A simple spreadsheet works. So does a note on your phone.

You don't claim drawings on your tax return. But when you reconcile your accounts, you'll want to know what went out and why. It also makes it obvious if you've been taking too much.

Your records matter for the return itself. You must register for Self Assessment if you earn more than £1,000 in a tax year, according to GOV.UK. For the 2025 to 2026 tax year, GOV.UK says the online return and the payment are both due by 11:59pm on 31 January 2027.

A warning about payments on account

Your tax bill can include payments on account, which are advance payments toward the next bill. They can make a January feel heavy. I explain how they work in payments on account explained. It's another reason to save a bit more than the bare minimum.

What I'd do

Fill the tax pot first, then pay yourself. Keep that order and the rest gets easy.

At Vcents we're building a way to get paid and track it inside WhatsApp, so you can see what's come in without opening a spreadsheet. But the habit matters more than any tool. Set up the tax pot today.

Sources

• GOV.UK: Income Tax rates and Personal Allowances, fetched 30 October 2026
• GOV.UK: Self-employed National Insurance rates, fetched 30 October 2026
• GOV.UK: Set up as a sole trader, pay tax, fetched 30 October 2026
• GOV.UK: Self Assessment tax return deadlines, fetched 30 October 2026