PAYE employee
£35,920
estimated cash take-home / year
Monthly equivalent£2,993
- Gross salary
- £45,000
- Income Tax (incl. van benefit)
- £6,486
- Employee National Insurance
- £2,594
- Taxable company van benefit (not cash)
- £—
- Extra Income Tax from van
- £—
PAYE vs sole trader
PAYE vs sole trader:
same gross, different take-home.
Compare a PAYE employee’s gross salary with the same amount of sole-trader turnover. We estimate tax, National Insurance and typical trade costs, so you can see why turnover is not the same as pay.
Make your comparisonYour comparison
What could the same gross leave?
Using 2026–27 tax rates
6 April 2026 – 5 April 2027
Estimated annual result
Your take-home comparison
At £45,000 gross, the PAYE estimate leaves about £35,920 after Income Tax and employee National Insurance. The sole-trader estimate starts from the same £45,000 turnover, then subtracts £10,277 in typical electrician costs, Income Tax and Class 4 National Insurance.
Sole trader
£28,963
estimated cash after costs, tax & NI / year
Monthly equivalent£2,414
- Turnover (same gross)
- £45,000
- Typical estimated costs
- £10,277
- Estimated taxable profit
- £34,723
- Income Tax
- £4,431
- Class 4 National Insurance
- £1,329
What this includes: 2026–27 Income Tax, employee Class 1 NI or sole-trader Class 4 NI, and estimated trade costs. Both sides start at the same annual gross amount. It assumes one income, the standard Personal Allowance, and an individual below State Pension age. It excludes pension, student loans, VAT, benefits other than the selected van, voluntary Class 2 NI, capital allowances and loss relief.
How trade costs change it
A van, tools and insurance come out of turnover.
The central estimate uses published vehicle and trade-tools evidence plus indicative insurance figures. The range shows lower and higher cost scenarios; it is a sensitivity range, not a promise of what you will spend.
Selected tradeElectrician
Estimated per yearVan running costs£6,780–£10,170Modelled central estimate: £8,475
Tools and small equipment£1,360–£2,040Modelled central estimate: £1,700
Business liability insurance£80–£200Indicative source example: £102
Typical estimated costs used above£10,277
Actual costs vary by vehicle, mileage, tools, cover and business use. Some tools may be capital purchases rather than immediate expenses; private use can reduce allowable deductions. Get tailored tax advice for your circumstances.
See sources and assumptions
Van costs: HMRC’s 2021–22 survey estimated sole traders’ and partnerships’ average annual van running costs at £6,590. We uprated that figure using ONS CPI from 2021 (111.6) to August 2026 (143.6), giving about £8,475. Lower and higher figures are ±20% scenarios we set; they are not published percentiles.
Tools: a 2023 trade-tools study reported annual spending of £1,546 for electricians, £769 for plumbers and £755 for painters/decorators. We CPI-uprated those figures to August 2026 and show ±20% scenarios. The study gives limited methodological detail, so treat these as indicative.
Insurance: published provider examples are about £102 for electrician and painter cover. The plumber illustration uses a £260 lower-percentile quote and a £368 guide average, with £314 as the midpoint. These are provider-specific examples, not national averages. The displayed low/high figures are sensitivity scenarios, not a measured distribution.
Tax: estimated sole-trader cash equals turnover less modelled cash costs, Income Tax on estimated profit and Class 4 NI. The model treats estimated costs as fully business-related and allowable for simplicity. Actual tax treatment depends on the expense, business use, accounting basis and capital allowance rules.
The rest of the offer
Cash is one part of the decision.
The calculator estimates cash. Review holiday, sick pay, pension, equipment and job security in the offer itself; these details differ and do not have a single reliable cash value.
Paid time off
Employees may receive paid annual leave. A sole trader usually needs to plan for days with no invoices.
Sick pay
Eligibility and employer schemes vary. Self-employed workers usually need to cover time away from work themselves.
Pension
Check the employer contribution and compare it with what you would save as a sole trader.
Equipment and status
Who provides the van, tools and materials matters. Employment status depends on the real working arrangement.
How to read this
A helpful comparison, not a tax return.
The PAYE figure is gross annual salary. The sole-trader figure is turnover before business costs. They are held equal because that is the headline comparison people often make; they do not represent equal work, risk or value.
The cost range is an illustrative model built from available evidence. It is not a trade-specific quote or a statistical confidence interval. Your own van, work pattern and expense eligibility can change the result substantially.
Estimates do not include mixed PAYE and self-employed income, pension deductions or tax relief, student loans, employer pension, employer National Insurance or other benefits. The company van line is shown separately from cash, with any estimated taxable benefit included in PAYE Income Tax.
PAYE and sole trader questions
What the comparison means
Clear answers to common questions about salary, turnover, business costs and take-home estimates.
Is £45,000 of sole-trader turnover the same as a £45,000 PAYE salary?
No. The calculator starts both examples at £45,000 to make the headline comparison straightforward. PAYE salary is pay before employee deductions. Sole-trader turnover is business income before business costs, Income Tax and National Insurance. The trader must cover costs such as a van, tools and insurance from turnover, so the two figures do not have the same meaning.
Why can a sole trader have less cash from the same gross amount?
A sole trader pays business costs from turnover before taking money home, then pays tax and National Insurance on taxable profit. An employee does not normally pay the employer’s costs for a company van or work equipment from their gross salary. Claiming an allowable expense can reduce taxable profit; it does not refund the full cost of the expense.
How does the PAYE vs sole-trader calculator estimate business costs?
Choose electrician, plumber or painter/decorator. The model applies a typical annual van running cost plus indicative trade-specific tools and liability insurance costs. It also shows a lower and higher cost scenario. These are planning assumptions based on published evidence and provider examples, not a quote or a measured range for every tradesperson.
How do I compare a day rate with an annual salary?
Multiply the sole-trader day rate by the number of days you expect to invoice in a year. For example, £205 × 220 billable days gives £45,100 of turnover before costs, tax and National Insurance. Billable days should account for holidays, sickness, admin, training and gaps between jobs.
Does a company van count as extra take-home pay?
No. The van is a work benefit, not cash salary. If private use is allowed, a taxable benefit may increase the employee’s Income Tax. The calculator shows that taxable value separately and estimates its additional Income Tax; the actual treatment depends on the van and how it is used.
What is missing from this estimate?
The estimate does not include pension contributions, student loan repayments, VAT, mixed employment and self-employment income, personal tax reliefs or all possible capital allowances. Actual allowable expenses and tax depend on your circumstances. Use the figures to frame questions, then check current HMRC guidance or speak to a tax professional.