£40,000 revenue: Limited company costs around £2,367.19 per year vs sole trader

Comparison assumes £4,000.00 annual expenses (10% default), £1,200.00 accountant fees for limited company, and 2026/27 UK tax assumptions.

Updated for 2026/27 · Reviewed by James Whitfield · Methodology and assumptions

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Sole trader

Profit£36,000.00
Income tax£4,686.00
Class 4 NI£1,405.80
Net take-home£29,908.20

Limited company (salary + dividends)

Director salary£12,570.00
Employer NI£1,135.50
Corporation tax£4,235.95
Dividend tax£1,887.54
Accountant fee£1,200.00
Net take-home£27,541.01

Headline difference

Annual difference: £-2,367.19 · Monthly difference: £-197.27

Sole trader route currently looks stronger on net take-home under these assumptions.

At what revenue does Ltd become worth it?

In many cases the crossover starts around £30k–£35k profit after expenses, once corporation/dividend tax efficiency outweighs accounting and admin costs. The exact point depends on margin, extraction strategy and compliance overhead.

Useful next links

£25,000 revenue £30,000 revenue £35,000 revenue £45,000 revenue £50,000 revenue £55,000 revenue Self-employed on equivalent profit Employed equivalent salary Dividend tax on extracted profits Open full calculator

FAQs

Should I go limited at £40,000 revenue?

It depends on your profit margin, admin tolerance and long-term plans. This page compares both routes under matched assumptions.

What are the hidden costs of a limited company?

Typical extra costs include accounting fees, compliance filing, payroll setup and admin time. This estimate includes a configurable accountant fee.

How are dividends taxed?

Dividend tax applies after the dividend allowance, then by UK dividend tax bands. This page shows dividend tax separately from corporation tax.