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Sole Trader vs Limited Company Calculator

Compare annual take-home from sole trading with a simple single-director company that pays out all remaining profit.

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A comparison with defined assumptions

For an individual in England, Wales or Northern Ireland with no other income, pensions, student loans or relief claims. Sole trader profit bears Income Tax and Class 4 NI. The company deducts salary, employer NI and extra running costs, pays Corporation Tax, then distributes the balance as a dividend.

Uses 2026/27 dividend rates of 10.75%, 35.75% and 39.35%, with the £500 allowance. The Personal Allowance tapers using salary plus dividends and is allocated to salary first. Corporation Tax uses 19%/25% with marginal relief for a twelve-month period, no associated companies and no exempt distributions.

Assumes an ordinary trading company with one director/shareholder and no Employment Allowance. No retained profits, incorporation costs, capital gains, IR35 or VAT effects are modelled. Salary is your choice, not an optimised recommendation; this comparison cannot determine the best business structure.

Sources: dividend tax, Corporation Tax, marginal relief fraction, self-employed NI and employer rates.

Tax year: 6 April 2026 to 5 April 2027. See our 2026/27 tax rates and sources. This is an estimate under the assumptions above, not a tax return or individual advice.

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