The tax free allowance for 2018/19 is £11,850.
Sole traders with income above £100,000 will see a restriction to their personal allowance and sole traders with income in excess of £123,700 will not have a personal allowance.
Sole traders (and partners in partnerships once the partnership profits have been apportioned) will pay tax at the same rates as employees.
The table shows the tax rates you pay in each band if you have a standard Personal Allowance of £11,850.
|Band||Taxable income||Tax rate|
|Basic rate||£0 to £34,500*||20%|
|Higher rate||£34,501 to £150,000*||40%|
|Additional rate||over £150,000*||45%|
*For 2018/19, there are different income tax rates for Scottish residents.
Note: Other income that sole traders receive in addition to business profits will need taxing separately. There are different rules for both tax and National Insurance for different income types. It is best to speak to a professional if you have particularly complex tax affairs.
Here are examples showing tax rates at 20% and 40%.