How to pay yourself as a sole trader: drawings explained

As a sole trader you pay yourself by taking drawings: you move money from the business account to your personal account whenever you choose. Drawings are not a salary and not a business expense, so they do not change your tax bill. You pay tax on your profit, so the real question is how much to leave behind for HMRC.

What are drawings?

Drawings are any money or assets you take out of your sole trader business for personal use. Legally you and the business are the same person, so the profit is already yours; drawings simply move it to where you spend it.

Drawings can be a regular transfer, a one-off payment, or business stock you take home. A sole trader cannot be an employee of their own business, so there is no PAYE salary and no payslip.

Are drawings taxed?

Drawings themselves are not taxed, and they are not deductible either. GOV.UK’s page on expenses if you’re self-employed says allowable expenses “do not include money taken from your business for personal use”. Calling drawings “wages” does not change this, because you cannot employ yourself.

What is taxed is your profit: income minus allowable expenses. You owe the same tax whether you take every pound out or leave it all in the bank.

How much tax will I pay on my profit?

For 2026/27, outside Scotland, you pay Income Tax and Class 4 National Insurance at these rates.

The rates come from GOV.UK’s Income Tax rates and self-employed National Insurance rates pages. The Personal Allowance falls by £1 for every £2 of income over £100,000. Scotland has its own Income Tax bands.

You pay no Class 2 NI. If your profit is £7,105 or more, Class 2 is treated as paid to protect your State Pension record. Below that, you can pay voluntary Class 2 at £3.65 a week.

Worked example: £40,000 profit

On a profit of £40,000 in 2026/27, outside Scotland:

• Income Tax: (£40,000 minus £12,570) x 20% = £5,486.00
• Class 4 NI: (£40,000 minus £12,570) x 6% = £1,645.80
• Total: £7,131.80, about 18% of profit

So if you take £2,700 a month in drawings (£32,400 a year), the remaining £7,600 or so needs to stay in the business for the tax bill. This assumes you have no other income. Try your own figures with the self-employed take-home pay calculator.

How to work out what to take

Use these five steps each month.

1. Check your profit so far. Take income received, minus allowable expenses paid. Bookkeeping software or a spreadsheet makes this quick.
2. Set aside tax. Move a fixed share of profit (for example 20% to 25% for basic rate profits) into a separate savings account.
3. Keep a buffer. Leave one to three months of business costs in the account for quiet months. Our guide to feast and famine cash flow explains how.
4. Take the rest as drawings. Transfer it to your personal account and label it “drawings” in your records.
5. Review each quarter. If profit jumps, raise your tax pot before you raise your drawings.

When is the tax due?

Self Assessment tax is due by 31 January after the tax year ends. For 2026/27 that is 31 January 2028.

GOV.UK says payments on account are due by 31 January and 31 July, each usually half of the previous year’s bill. They do not apply if last year’s bill was under £1,000, or if you paid more than 80% of your tax at source. In your first big year, this can mean paying the full balance plus the first payment on account on the same day. In the example above, that is £7,131.80 plus £3,565.90, or £10,697.70, on 31 January 2028.

You can check your timeline with the payments on account calculator.

Do I need a separate bank account?

There is no legal requirement for a sole trader to have a separate business account. GOV.UK says you must keep records of your business income and expenses, and a separate account makes those records, and your drawings, much easier to see. See do sole traders need a business bank account? for the detail.

Which applies to you?

• If your profit is under £12,570, you will usually pay no Income Tax or Class 4 NI, so you can take most of it as drawings.
• If your qualifying income is over £50,000, you have been in Making Tax Digital for Income Tax since 6 April 2026. The threshold falls to £30,000 from 6 April 2027 and £20,000 from 6 April 2028, so keep digital records of income and expenses.
• If your profit is regularly above £50,270, compare the costs of running a limited company, where you can pay yourself salary and dividends. Start with sole trader vs limited company.

Frequently asked questions

Can a sole trader pay themselves a salary?

No. A sole trader cannot employ themselves or run payroll for themselves. You take drawings, and you pay tax on the business profit through Self Assessment.

Do drawings reduce my tax bill?

No. Drawings are not an allowable expense, so they do not reduce your profit. This applies even if you call them wages.

How much should a sole trader set aside for tax?

A basic rate taxpayer pays 20% Income Tax and 6% Class 4 NI on profit above £12,570, which works out at up to about 20% of total profit in 2026/27. Many people set aside 25% to cover payments on account and surprises.

Can I take more drawings than my profit?

Yes, but you are then using your own capital or borrowing, and you still owe tax on the profit. Taking too much can leave you short when your Self Assessment bill is due.

Do I need to record drawings?

Yes. Record each transfer as drawings in your books, so it is not mistaken for an expense or for income.