Sole trader or limited company calculator

Free tool

Tax year

6 April to 5 April. The company's year is taken as 1 April to 31 March alongside it.

Business profit for the year

Income less business expenses, before any tax or pay to yourself. For example, 50,000.

Your other income (optional)

Taxable income from anything else in the tax year, such as a job, a pension or rent.

As a company, would you be its only employee paid over £5,000 a year?

Answer yes if you work alone. With another employee paid over that, the company can claim the Employment Allowance.

Yes No

Do you pay Scottish Income Tax? (optional)

Yes if your main home is in Scotland. It changes the tax on trading profit and salary, not on dividends.

Yes No

For one owner taking out all the profit each year. General information, not tax advice.

Example

Worked example

Tax year: 2026-27; Business profit: £50,000; Director is the only employee: yes. Enter your own details to replace this example.

For 2026/27, on £50,000 of profit, a sole trader keeps £40,268.20 after Income Tax and Class 4 National Insurance. A limited company paying out all its profit, with a £12,570 salary and dividends, leaves £38,861.95, so the sole trader keeps £1,406.25 more.

Sole trader: take-home: £40,268.20
Sole trader: Income Tax: £7,486.00
Sole trader: Class 4 National Insurance: £2,245.80
Sole trader: Class 2 National Insurance: £0.00 (treated as paid at profits of £7,105 or more)
Limited company: take-home: £38,861.95
Limited company: how it pays you: £12,570 salary plus £29,398.54 of dividends
Limited company: Corporation Tax: £6,895.96
Limited company: National Insurance: £1,135.50
Limited company: Income Tax and dividend tax: £3,106.59
Difference: £1,406.25 more as a sole trader
Break-even: With these settings, a company leaves you more only at profits between £60,142 and £60,506; at other profits up to £300,000 a sole trader keeps more.

Side by side

Tax on the same profit as a sole trader and as a limited company, 2026/27
	Sole trader	Limited company
Profit	£50,000.00	£50,000.00
Paid to you as salary	none	£12,570.00
Corporation Tax	none	£6,895.96
Employer National Insurance	none	£1,135.50
Class 4 or employee National Insurance	£2,245.80	£0.00
Income Tax on profit or salary	£7,486.00	£0.00
Dividend tax	none	£3,106.59
Total tax	£9,731.80	£11,138.05
You keep	£40,268.20	£38,861.95

The company pays out everything left after Corporation Tax as dividends, in the same year. Leaving profit in the company defers dividend tax, which this comparison doesn't count.
Running costs aren't included: a company files accounts at Companies House and a Company Tax Return, and runs a payroll for a salary. Weigh those against any tax saving.
Class 2 National Insurance is treated as paid once profits reach the small profits threshold, so a sole trader has none to pay; below it, paying voluntarily protects the State Pension record.
The company is assumed to have the owner as its only employee, so it can't claim the Employment Allowance.
Income Tax uses the rates for England, Wales and Northern Ireland (Wales has the same rates).
Only the extra tax the business causes is counted, not the tax on your other income alone. The company's year is taken as 1 April to 31 March.

Sources: HMRC: Income Tax rates and allowances for current and previous tax years GOV.UK: Self-employed National Insurance rates HMRC: Rates and allowances for National Insurance contributions GOV.UK: Tax on dividends HMRC: Rates and thresholds for employers 2026 to 2027 GOV.UK: Employment Allowance, check if you're eligible GOV.UK: Corporation Tax rates and reliefs