How do I pay myself as a sole trader?

You don't pay yourself a wage. As a sole trader you take money out as drawings, which are not an expense. In 2026-27 you pay Income Tax and Class 4 National Insurance on your profit, whatever you take out.

The rules below follow GOV.UK, the 2026 notes to the self-employment pages of the tax return and HMRC's private and personal expenditure toolkit, as checked on 17 October 2026.

Drawings are not a wage

As a sole trader, there is no separate business to employ you. GOV.UK puts it simply: you keep all the profits after paying tax, and you are personally responsible for the debts of the business. There is no employer to pay you, so there is no salary and no payslip. Whatever you move from the business to yourself is called drawings.

The tax return notes say allowable expenses do not include your own salary, wages or drawings, or your own National Insurance contributions. HMRC's toolkit adds that calling drawings "wages" or "salary" makes no difference: they are still not an allowable expense. The law behind this is section 34 of the Income Tax (Trading and Other Income) Act 2005, which stops a deduction for costs not incurred wholly and exclusively for the trade, apart from an identifiable business part.

Paying your partner or spouse is different. A real wage for real work in the business can be an expense. Our guide on paying your partner a wage covers the rules.

What is and is not an expense

Tax is on profit, not on what you take

A self-employed plumber in England takes £60,000 from customers in 2026-27 and spends £20,000 on materials, van and tools. Profit is £40,000. They transfer £2,500 a month to their own account, £30,000 in the year.

If the plumber took out £20,000 or £40,000 instead, the tax would not change. The £10,000 left in the account is not tax-free: it has already been counted as profit. This is an example only, with no other income, no VAT and no Class 2.

Recording drawings, including from one shared account

GOV.UK says you might be able to use a personal or business bank account for your business, and to check with your bank which type it allows. So you can pay yourself from the account you already have. If one account holds your trade money and your personal money, the job is to tag each business payment in and out. Making Tax Digital (MTD) guidance says expenses that are not for business use do not need a digital record.

If you use traditional accounting rather than the cash basis, GOV.UK says your records should also show how much money you have taken out for your own use.

Watch for personal spending hidden among business costs. HMRC's toolkit says household bills such as utilities, mortgage and insurance paid from the business account must be moved to drawings, or your profit is understated. It also says that if a loan or overdraft is funding your drawings, that part of the interest is not allowable.

Transfer or cash

For tax the two are the same: both are drawings. A transfer leaves a clear line on your statement. Cash from a machine does too, but only as a withdrawal, so note what it was for. If you spend some of that cash on materials, keep the receipt, because that part is a business expense.

Setting money aside for tax

No tax is taken off your drawings, so keep some of what comes in aside. Payments on account are advance payments towards your next bill, including Class 4 National Insurance. Each is half of last year's bill, due by 31 January and 31 July, with any balance due by the next 31 January. You do not make them if last year's bill was under £1,000, or if you paid more than 80% of last year's tax outside Self Assessment, such as through a tax code.

In the example, if last year's bill was also £7,132, the plumber pays £3,566 by 31 January 2027 and again by 31 July 2027 towards 2026-27.

How a limited company is different

A limited company is a separate legal person. GOV.UK says the company can pay a director a salary through payroll, can pay dividends to its shareholders out of available profits, and that money a director takes out beyond what they have put in, that is not salary or dividend, is a director's loan. The tax rules for each are different. Our guide on sole trader or limited company sets out the differences.

What this means for you

You can take what you need, when you need it. The amount does not change your tax. What matters is that your business income and costs are right, and that you keep enough back for 31 January and 31 July.

Steps to pay yourself

1. Work out a regular amount you can take, leaving room for tax and quiet months.
2. Transfer it to yourself on the same day each month, with a reference such as "drawings".
3. Move a share of each payment you receive into a savings pot for tax.
4. Tag each business payment as income or expense, and keep personal spending out of your business totals.
5. If you paid for something personal from the business account, treat it as drawings.
6. Pay your tax and payments on account from your tax pot by 31 January and 31 July.

Under MTD your quarterly updates carry totals for each income and expense category, and drawings are neither. The free MTD check shows when MTD starts for you, and the trades section has more guides.