Sole Trader vs Limited Company Calculator
Enter your annual profit to compare the tax you would pay as a sole trader with running the same business through a limited company.
Your business
Side by side
| Sole trader | Limited company | |
|---|---|---|
| Profit | 60,000.00 | 60,000.00 |
| SalaryPaid by the company to its director | — | 12,570.00 |
| Employer's National Insurance | — | 1,135.50 |
| Corporation Tax | — | 8,795.86 |
| Dividend | — | 37,498.00 |
| Income tax | 11,432.00 | 3,977.28 |
| National InsuranceClass 4 for a sole trader, employee's Class 1 for a director | 2,456.60 | 0.00 |
| Total tax | 13,888.60 | 13,908.64 |
| Take-home | 46,111.40 | 46,090.72 |
Example. On a profit of £60,000 for 2026-27, a sole trader takes home £46,111.40 and the owner of a limited company £46,090.72, so the sole trader is ahead by £20.68 before the cost of running a company.
How each is taxed
A sole trader pays income tax and Class 4 National Insurance on the whole profit, whether or not it is drawn. A company pays corporation tax on its profit, and the owner then pays income tax on the salary and dividends taken out.
Tax is not the whole picture
A company must file annual accounts and a confirmation statement at Companies House and a CT600 with HMRC, and run a payroll if it pays a salary. It also gives limited liability and lets you leave profit in the company rather than drawing it all. The comparison here assumes all profit is taken out each year.
Sole trader and limited company take-home by profit, 2026-27
Worked through this calculator for England, Wales and Northern Ireland: no other income, the best of the standard salary levels for the company, and all remaining profit paid as a dividend.
| Profit | Sole trader take-home | Limited company take-home | Difference | Ahead |
|---|---|---|---|---|
| £20,000 | £18,068.20 | £17,173.72 | £894.48 | Sole trader |
| £30,000 | £25,468.20 | £24,402.97 | £1,065.23 | Sole trader |
| £40,000 | £32,868.20 | £31,632.22 | £1,235.98 | Sole trader |
| £50,000 | £40,268.20 | £38,861.47 | £1,406.73 | Sole trader |
| £60,000 | £46,111.40 | £46,090.72 | £20.68 | Sole trader |
| £75,000 | £54,811.40 | £53,403.40 | £1,408.00 | Sole trader |
| £100,000 | £69,311.40 | £65,209.33 | £4,102.07 | Sole trader |
| £150,000 | £92,040.40 | £85,321.17 | £6,719.23 | Sole trader |
Sole trader National Insurance, 2026-27
Class 4 National Insurance on trading profit.
| Threshold or rate | Amount |
|---|---|
| Lower profits limit | £12,570 |
| Upper profits limit | £50,270 |
| Rate between the limits | 6% |
| Rate above the upper limit | 2% |
Dividend tax rates
Dividends covered by unused Personal Allowance, and then by the dividend allowance, are taxed at 0%.
| Tax year | Dividend allowance | Basic rate band | Higher rate band | Additional rate band |
|---|---|---|---|---|
| 2026-27 | £500 | 10.75% | 35.75% | 39.35% |
| 2025-26 | £500 | 8.75% | 33.75% | 39.35% |
Frequently asked questions
At what profit does a limited company save tax?
On tax alone, with all the profit taken out, the sole trader takes home more at every profit in the table for 2026-27, by between £20.68 at £60,000 and £6,719.23 at £150,000. A company can still come out ahead if you leave profit in it rather than drawing it all, which the comparison does not assume.
Do you pay less tax as a limited company than as a sole trader?
It depends on the profit and how much you take out. A sole trader pays income tax and Class 4 National Insurance on the whole profit. A company pays corporation tax, and the owner pays income tax on the salary and dividends taken. The calculator shows both for your figure.
Does a sole trader pay tax on profit left in the business?
Yes. A sole trader is taxed on the whole profit for the year whether or not it is drawn. Profit kept in a company bears corporation tax only, until it is paid out.
What extra filing does a limited company have?
Annual accounts and a confirmation statement at Companies House, a Company Tax Return (CT600) with HMRC, and payroll returns if it pays a salary.
Related calculators
Sources: Income Tax rates and Personal Allowances, Self-employed National Insurance rates, Corporation Tax rates and allowances, Tax on dividends, Rates and thresholds for employers 2026 to 2027 on GOV.UK.
Last updated .
Need to file the CT600?
This calculator is for guidance only. Tax Optimiser prepares the full corporation tax computation and files the CT600 and accounts with HMRC and Companies House.
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