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Sole trader vs limited company (UK): rough take-home comparison

Enter your estimated annual profit and how you’d take money out of a company (salary/dividends). This tool gives a rough comparison of take-home as a sole trader vs running a limited company.

19–25%corporation tax
10.75%basic dividend rate
6%Class 4 NI
Last updated

Calculator

This is a simplified model using 2026/27 rates for England, Wales and Northern Ireland. Real outcomes depend on many factors (expenses, other income, pension, student loans, VAT, benefits, allowable expenses, accounting periods, etc.).

£
Income minus business expenses, before paying yourself.
£
For example a part-time job or a pension. Treated as earned income.

Limited company assumptions

Choose a simple “extraction” plan (how you take money out of the company).

£
Common choices are £5,000 (no employer NI) or £12,570 (the personal allowance). Leave blank for £12,570.
£
Post-tax profit you leave in the company instead of paying out as dividends.

Rough running costs

Optional: add simple annual costs (accountant, software, etc.).

£
£
Your comparison shows here.Enter your profit and press Compare. After that, results update as you change anything.
Updates as you type
Best option (estimate)
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Sole trader take-homeHigher
Limited company take-homeHigher

Breakdown (very simplified)

Sole trader

Limited company

Estimates only. Not financial, tax, or legal advice. If you’re close to thresholds or have other income, get professional advice.

Rates used (2026/27)

TaxRate
Income tax (England, Wales, NI)0% to £12,570, 20% to £50,270, 40% to £125,140, 45% above. Personal allowance falls by £1 for every £2 over £100,000.
Class 4 NI (sole trader)6% on profits £12,570 to £50,270, 2% above
Employee NI (director’s salary)8% on £12,570 to £50,270, 2% above
Employer NI15% above £5,000 a year
Corporation tax19% up to £50,000 profit, 25% over £250,000, marginal relief in between
Dividend tax£500 allowance, then 10.75% (basic), 35.75% (higher), 39.35% (additional)

What this tool is best for

  • Getting a quick feel for whether incorporating might increase take-home at your profit level.
  • Understanding that extraction strategy (salary vs dividends) changes the result.
  • Deciding whether it’s worth speaking to an accountant.

What it does not include

  • Pensions, student loans, child benefit taper, VAT, expenses differences, capital allowances, IR35, Scottish income tax rates, etc.
  • Director-specific NI nuances (annual earnings period) and payroll timing differences.
  • Associated companies, which share the corporation tax limits, and any sector-specific rules.

Official guidance