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.
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. Class 2 NI was abolished from April 2024. 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.
The crossover depends on profit level and your specific assumptions. At £25,000–£30,000 profit, the tax saving from going limited is typically small (£500–£1,500) and may not justify accountant fees of £1,000–£2,000 per year. At £40,000–£50,000, the saving becomes more material (£2,000–£4,000) and incorporation is commonly cost-effective. Above £60,000, the saving is typically £5,000 or more per year and the case for a limited company is usually clear.
| Annual profit | Typical sole trader tax | Typical Ltd company tax | Approx. annual saving |
|---|---|---|---|
| £30,000 | ~£5,500 | ~£4,200 | ~£1,300 |
| £50,000 | ~£12,400 | ~£9,100 | ~£3,300 |
| £75,000 | ~£22,900 | ~£16,800 | ~£6,100 |
| £100,000 | ~£34,400 | ~£24,500 | ~£9,900 |
Estimates assume standard personal allowance (1257L), no pension, England/Wales rates. Limited company assumes minimum salary at secondary NI threshold plus remaining profit extracted as dividends. 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.