Sole Trader vs Limited Company Calculator (2026/27)

Compare your take-home pay as a sole trader and as a limited company director for 2026 to 2027, using the latest dividend and NI rates.

UK, tax year 2026 to 2027 Free, no sign-up Runs in your browser
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Better take-home

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  • Sole trader take-home—
  • Limited company take-home—
  • Sole trader tax and NI—
  • Company: all taxes—
  • Corporation Tax—
  • Dividends paid out—

Assumes the company pays out all profit after tax as dividends, and that you're the only employee (so no Employment Allowance).

Comparison at different profit levels

ProfitSole traderLimited companyBetter by
Enter your numbers above to see this table.

From April 2026, dividend tax rose to 10.75% (basic rate) and 35.75% (higher rate), and employer National Insurance is 15% above £5,000. This has made a limited company less attractive for many people on modest profits than it used to be.

How to use this calculator

  1. Enter your yearly business profit before paying yourself.
  2. Choose a director's salary. Many directors take £12,570, the Personal Allowance.
  3. Add the extra cost of running a company, such as higher accountancy fees, for a fair comparison.

How it's calculated

Sole trader: Income Tax + Class 4 NI on the whole profit Company: Employer NI = 15% × (salary − £5,000) Employee NI = 8% × (salary − £12,570), 2% above £50,270 Company profit = profit − salary − employer NI − running costs Corporation Tax = 19% up to £50,000, 25% from £250,000, marginal relief in between (3/200 fraction) Dividends = company profit − Corporation Tax Dividend tax = £500 allowance, then 10.75% / 35.75% / 39.35% Take-home = salary − employee NI − Income Tax + dividends − dividend tax

Worked example

Sam in England makes £60,000 profit, and would take a £12,570 salary if they set up a company.

Sole trader Income Tax = 37,700 × 20% + 9,730 × 40% = 11,432.00 Class 4 NI = 37,700 × 6% + 9,730 × 2% = 2,456.60 Take-home = 60,000 − 13,888.60 = £46,111.40 Limited company Employer NI = (12,570 − 5,000) × 15% = 1,135.50 Company profit = 60,000 − 12,570 − 1,135.50 = 46,294.50 Corporation Tax = 46,294.50 × 19% = 8,795.96 Dividends = 46,294.50 − 8,795.96 = 37,498.55 Dividend tax = (37,498.55 − 500) × 10.75% = 3,977.34 Take-home = 12,570 + 37,498.55 − 3,977.34 ≈ £46,091.20

At £60,000 the two are almost level: the sole trader comes out £20 ahead, before the extra costs of running a company. A company can still help at higher profits, or if you keep money in the business rather than paying it all out.

What this calculator doesn't cover

  • Keeping profit in the company, pension contributions from the company, or paying a spouse.
  • IR35, other income, student loans and the High Income Child Benefit Charge.
  • Non-tax reasons for a company, such as limited liability or how clients see you.

Frequently asked questions

Why do directors take a £12,570 salary?

It uses the Personal Allowance, so there's no Income Tax on it, and it's below the employee NI threshold. The employer NI it costs is a deductible expense for the company. Some directors choose a lower salary; try different amounts above.

Is a limited company always better?

No. At many profit levels the difference is small, and running a company costs more in accountancy and admin. Talk to an accountant before changing your business structure.

Can I claim the Employment Allowance?

Not if you're a one-director company where the director is the only employee paid above the secondary threshold. That's why this calculator doesn't include it.

Sources (2026 to 2027): tax on dividends, Corporation Tax rates, employer rates and thresholds, Employment Allowance eligibility.

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Disclaimer: results are estimates for planning only and are not tax, legal or financial advice. Rules and rates vary by country, state and personal situation. Check with a qualified accountant before making decisions. Read the full disclaimer.

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