Choosing between sole trader and limited company status changes how profits are taxed. This calculator gives a simplified take-home comparison for the 2026/27 tax year.
How it’s worked out
Sole trader: Income Tax on profits (England/Wales/NI or Scotland bands) plus Class 4 National Insurance (6% between £12,570 and £50,270, then 2%).
Limited company:
- Pay yourself a salary (default £12,570). Employee tax/NI apply; employer NI at 15% above £5,000 comes out of company funds.
- Corporation Tax on remaining company profit (19% up to £50,000, marginal relief to £250,000, then 25%).
- Take the rest as dividends and apply 2026/27 dividend tax (£500 allowance; 10.75% / 35.75% / 39.35%).
What we leave out
Accountancy fees, Confirmation Statement costs, VAT, pension contributions, IR35, Employment Allowance nuance for single-director companies, and benefits-in-kind. Use this as a starting point, not advice.
Frequently asked questions
Is a limited company always better?
Not always. Corporation Tax, dividend tax, accountancy fees, and admin can outweigh the savings at lower profits. This tool is a simplified comparison — speak to an accountant for your situation.
What salary does the limited company model use?
By default it uses a salary equal to the Personal Allowance (£12,570). You can change this. Employer NI is deducted from company profit before Corporation Tax.
Sources
- Income Tax rates and Personal Allowance (checked 5 October 2026)
- Scottish Income Tax rates (checked 5 October 2026)
- Rates and thresholds for employers 2026 to 2027 (checked 5 October 2026)
- National Insurance: how much you pay (checked 5 October 2026)
- National Insurance rates and categories (checked 5 October 2026)
- 2026 to 2027: Student and Postgraduate Loan deduction tables (checked 5 October 2026)
- Tax on dividends (checked 5 October 2026)
- Corporation Tax rates and allowances (checked 5 October 2026)
- Income Tax — changes to tax rates for property, savings and dividend income (checked 5 October 2026)