Sole trader vs limited company calculator 2026/27
Would you keep more of your profit as a sole trader or through a limited company? Enter your numbers and see both side by side, including what a company lets you keep back, and how a sole trader actually pays the bill. Every line of the working is shown.
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Your sales minus your business costs, before any tax and before you pay yourself anything. If you already trade, use last year's figure from your accounts or tax return. If you are starting out, use your best estimate.
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This is the question that decides the answer. As a sole trader you are taxed on all your profit whether you spend it or not. A company is only taxed at company rates on profit you leave in it, so if you can afford to leave some in the business, a company starts to win.
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A company needs statutory accounts, a Corporation Tax return, a confirmation statement, payroll for your salary and dividend paperwork, on top of your personal tax return. Accountancy fees are usually several hundred to over a thousand pounds a year more than for a sole trader. We treat this as a company cost, so it reduces the company's tax too. Leave at 0 if you want to compare tax alone.
Tailor it to you: pension, other income, more than one director, children, Scottish tax
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How much you want to end up in your pension this year. The two structures get there differently. A sole trader pays in personally: you pay 80% and the provider adds 20% relief, and HMRC extends your basic rate band by the gross amount. A company pays the whole amount in as an employer contribution, which reduces the company's profit before Corporation Tax and carries no National Insurance or personal tax. Leave at 0 to compare without pensions.
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Any income outside this business, such as a part-time job, a pension or rent from a property. HMRC taxes it alongside your business profit or salary, and before any dividends. We show only the extra tax your business adds on top of it. Leave at 0 if none.
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If the higher earner's income goes over £60,000, some Child Benefit is taken back through tax, and all of it once you reach £80,000. A company can help here, because profit left in the company does not count as your income.
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By default we assume you would be the company's only director and only employee. A company like that cannot claim the Employment Allowance. If there would be two or more directors, or you would employ staff, the company can usually claim it: a discount of up to £10,500 a year on the National Insurance it pays as an employer, which wipes out the £1,136 charged on your £12,570 salary. It can also make a higher salary worth considering, which you can explore in the director take-home calculator.
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Scotland sets its own Income Tax bands for trading profits and salaries. Choose Scotland if your tax code starts with an S. Dividends and National Insurance are the same UK-wide.
- Tax year 2026/27 rates. The company pays you the usual £12,570 salary and the rest as dividends.
- Assumes you would be the company's sole director and only employee, so no Employment Allowance, unless you tick the option under "Tailor it to you".
- Sole traders pay Class 4 NI only; Class 2 is no longer payable for most.
- Pension contributions, if entered, are personal (relief at source) for the sole trader and employer contributions for the company. Ignores student loans, VAT and the one-off costs of setting up a company.
- Figures rounded to the nearest pound. Illustrative, not advice.
Sole trader
You keep
after tax, all of it yours to spend or save
- Profit
- £0
- Income Tax
- £0
- Class 4 National Insurance
- £0
- Child Benefit charge
- £0
- Paid into your pension (net)
- £0
- Total tax
- £0
Limited company
You keep
in your pocket after tax
- Salary
- £0
- Dividends
- £0
- Available to spend now
- £0
- Kept in the company for later
- £0
- Extra running costs
- £0
- Employer NI
- £0
- Corporation Tax
- £0
- Income Tax on salary
- £0
- Dividend tax
- £0
- Child Benefit charge
- £0
- Paid into your pension by the company
- £0
- Total tax
- £0
Money kept in the company is still yours. It has paid Corporation Tax but no personal tax yet, and you only pay dividend tax if and when you take it out, ideally in a year when your income is lower. Think of it as saved for later rather than lost.