By profit
Self-employed on £60,000: tax, Child Benefit and the company question
Two lines meet at sixty thousand pounds: the start of the Child Benefit charge and the profit at which a company comes closest to a sole trader on cash.
At £60,000 of profit a sole trader in England, Wales or Northern Ireland pays £11,432 of Income Tax and £2,457 of Class 4 for 2026/27, £13,889 in all, and keeps £46,111. In Scotland the bill rises to £15,639. Of the profit, £9,730 is already taxed at the higher rate of 40 %. The figure is also the exact starting point of the High Income Child Benefit Charge, which applies when adjusted net income is over £60,000. Sitting precisely on it, nothing is repaid; each further £200 takes back one per cent of the year's Child Benefit, until all of it goes at £80,000. Sixty thousand is also about where a one-person company comes closest to a sole trader. Paying everything out as salary and dividends, the company leaves £20 less than trading alone, before its running costs, so the outcome depends on those costs and on how much profit stays in the business.
Self Assessment bill 2026/27
£13,889
Put aside 23.1 % of your profit · next £100 of profit costs 42.0 %
| Profit | £60,000 |
| Income Tax | £11,432 |
| Class 4 National Insurance | £2,457 |
| Class 2 | treated as paid |
| Kept from your profit | £46,111 |
When you pay, if 2026/27 is your first year
| 31 January 2028: bill + first payment on account | £20,833 |
| 31 July 2028: second payment on account | £6,944 |
Each payment on account is half of £13,889 (Income Tax and Class 4, loans excluded). How payments on account work
Making Tax Digital at this turnover
Turnover of £60,000 is over the £50,000 test. If your 2024/25 return showed income like this, quarterly updates start on 6 April 2026. Check your start date
Figures checked by Radif Partners · Editorial policy · How we calculate
Standing exactly on the Child Benefit threshold
The charge looks at adjusted net income, not at profit as such. For a sole trader with no salary, savings or dividends, the two are the same, minus any pension contributions or Gift Aid. Up to £60,000 nothing is due. Above it, every £200 costs one per cent of the year's Child Benefit, so the whole benefit is repaid by £80,000. Because you already file a return, HMRC requires the charge to go through Self Assessment, added to the same January bill.
| Adjusted net income | Share repaid | One child | Two children |
|---|---|---|---|
| £60,000 | 0 % | £0 | £0 |
| £62,000 | 10 % | £141 | £234 |
| £65,000 | 25 % | £352 | £584 |
| £70,000 | 50 % | £703 | £1,169 |
| £75,000 | 75 % | £1,055 | £1,753 |
| £80,000 | 100 % | £1,407 | £2,337 |
For a parent of two, the charge works like an extra tax of about 11.7 % on each pound of profit between £60,000 and £80,000, on top of the 42 % already paid in Income Tax and Class 4. If both parents are over the line, the one with the higher income pays. More detail is on the Child Benefit charge page.
Pension contributions pull the figure back
Paying into a personal pension lowers adjusted net income by the gross amount. A photographer who expects £64,000 and pays £4,000 gross is back at £60,000 for the charge. Relief comes from two directions: the provider adds the basic 20 %, and the return gives back the difference between the higher rate and that basic rate on the slice taxed at 40 %. Class 4 is unaffected, because it is charged on profit before any pension. Figures for other amounts are on the pension relief page.
Company and sole trader neck and neck
When every pound is paid out, a one-person company gets nearest to self-employment at around this profit. At £58,000 it trails by £306. At £60,000, a salary of £12,570 plus dividends leaves the director £46,091, against £46,111 as a sole trader. Further up the gap opens again: company profit above £50,000 starts to lose the small profits rate, and dividends reach the upper rate of 35.75 %, so at £75,000 the company is £1,408 behind. Accountancy fees easily exceed that gap, so the decision tends to rest on other things: whether profit can be left in the business, how stable the income is, and the extra administration. The comparison tool lets you test a partial payout.
Paying the higher rate on £9,730
Above £50,270, Income Tax rises to 40 % and Class 4 drops to 2 %, so the next pound costs 42 %. In Scotland the same pound costs 44 %, since 42 % applies, and the bill of £15,639 is £1,750 higher. Once established, this business pays two instalments of £6,944, on 31 January 2028 and 31 July 2028.