How to Pay Yourself as a Sole Trader in the UK

How to Pay Yourself as a Sole Trader in the UK

As a sole trader in the UK, you’re not paid a traditional salary. Instead, you take what’s known as drawings—payments made from your business profits to yourself. But how do you pay tax on this income, and what should you set aside?

You’re personally taxed on the profits your business generates, not the money you withdraw. This means your Income Tax and National Insurance Contributions (NICs) are calculated on business earnings after allowable expenses are deducted.

To stay on top of your finances: