Compare net take-home from both business structures using matched assumptions — revenue, expenses, region and accountant fees.
Updated for 2026/27 · Reviewed by James Whitfield · Methodology and assumptions
Sole trader route currently looks stronger on net take-home under these assumptions.
Running a limited company instead? Browse all 7 packs in the Tax Pack Library · £9.99
Model both business structures with matched assumptions to compare net take-home on a like-for-like basis.
Enter annual revenue, business expenses and accountant fees to define your real taxable base.
Review sole trader net income versus limited company net income under the same region and tax-year assumptions.
Use annual and monthly difference figures to decide whether incorporation is worthwhile at your current level.
Sole trader: Net profit (revenue minus allowable expenses) is taxed directly as income using the standard income tax bands. On top of income tax, you pay Class 4 NI: 6% on profits from £12,570 to £50,270, and 2% above £50,270. Compulsory Class 2 NI ended from April 2024 (it is now voluntary if profits are under £7,105). There is no employer NI, no corporation tax and no dividend extraction step.
Limited company: The company pays corporation tax on profits before you extract them. For 2026/27, the small profits rate is 19% on profits up to £50,000, the marginal relief rate is 26.5% on profits from £50,001 to £250,000, and the main rate is 25% above £250,000. After corporation tax, directors typically take a low salary (around the personal allowance or NI secondary threshold) and extract the rest as dividends. Dividend tax rates are 10.75% (basic), 35.75% (higher) and 39.35% (additional), with the first £500 tax-free. No employee NI applies to dividends.
The tax saving from a limited company comes from three things: paying corporation tax at 19–25% rather than income tax at 20–45%, paying dividend tax rather than income tax on extracted profit, and avoiding employee NI on dividends. But accountant costs and the compliance burden of running a company offset part of that saving. Against that, profit drawn out of a company is taxed twice — Corporation Tax first, then dividend tax — so once all profit is extracted the combined rate can exceed the sole trader's income tax plus Class 4 NI (see the table below).
For 2026/27, the answer has changed. With dividend tax at 10.75% and 35.75% from 6 April 2026, Corporation Tax at 19–25% and employer NI at 15% above £5,000, sole traders keep more in the illustrated full-extraction scenarios below — a sole director taking a £12,570 salary and the rest of the profit as dividends, with no Employment Allowance and no other income. In those scenarios the company costs roughly £1,000–£4,100 a year more before accountant fees. That does not mean incorporation is generally tax-inefficient: leaving profit in the business (taxed at Corporation Tax rates only), employer pension contributions, the Employment Allowance (if the company has another employee) or other shareholders can change the result, and there are non-tax reasons such as limited liability.
| Annual profit | Typical sole trader tax | Typical Ltd company tax (incl. CT, employer NI, dividend tax) | Difference |
|---|---|---|---|
| £30,000 | ~£4,500 | ~£5,600 | ~£1,100 more as Ltd |
| £50,000 | ~£9,700 | ~£11,100 | ~£1,400 more as Ltd |
| £75,000 | ~£20,200 | ~£21,600 | ~£1,400 more as Ltd |
| £100,000 | ~£30,700 | ~£34,800 | ~£4,100 more as Ltd |
Estimates for 2026/27 from this site's calculator: standard personal allowance (1257L), no pension, England/Wales rates, no accountant fee. Limited company assumes a sole director with no other income, a £12,570 salary (employer NI £1,135.50, no Employment Allowance) and all remaining profit paid out as dividends. Retaining profit, employer pension contributions, the Employment Allowance or other shareholders would change these figures. Use the calculator above for precise figures based on your actual inputs.
This calculator is for planning estimates only. For an incorporation decision, get advice from a qualified accountant who knows your specific circumstances. Reviewed by James Whitfield.