# Sole Trader vs Limited Company Calculator

> Compare the tax and take-home pay on the same profit as a sole trader and through a limited company paying salary and dividends.

Enter your annual profit to compare the tax you would pay as a sole trader with running the same business through a limited company.

Use the calculator: https://www.taxoptimiser.co.uk/calculators/sole-trader-vs-limited-company

Example: On a profit of £60,000 for 2026-27, a sole trader takes home £46,111.40 and the owner of a limited company £46,090.72, so the sole trader is ahead by £20.68 before the cost of running a company.

## How each is taxed

A sole trader pays income tax and Class 4 National Insurance on the whole profit, whether or not it is drawn. A company pays corporation tax on its profit, and the owner then pays income tax on the salary and dividends taken out.

## Tax is not the whole picture

A company must file annual accounts and a confirmation statement at Companies House and a CT600 with HMRC, and run a payroll if it pays a salary. It also gives limited liability and lets you leave profit in the company rather than drawing it all. The comparison here assumes all profit is taken out each year.

## Sole trader and limited company take-home by profit, 2026-27

Worked through this calculator for England, Wales and Northern Ireland: no other income, the best of the standard salary levels for the company, and all remaining profit paid as a dividend.

| Profit | Sole trader take-home | Limited company take-home | Difference | Ahead |
| --- | --- | --- | --- | --- |
| £20,000 | £18,068.20 | £17,173.72 | £894.48 | Sole trader |
| £30,000 | £25,468.20 | £24,402.97 | £1,065.23 | Sole trader |
| £40,000 | £32,868.20 | £31,632.22 | £1,235.98 | Sole trader |
| £50,000 | £40,268.20 | £38,861.47 | £1,406.73 | Sole trader |
| £60,000 | £46,111.40 | £46,090.72 | £20.68 | Sole trader |
| £75,000 | £54,811.40 | £53,403.40 | £1,408.00 | Sole trader |
| £100,000 | £69,311.40 | £65,209.33 | £4,102.07 | Sole trader |
| £150,000 | £92,040.40 | £85,321.17 | £6,719.23 | Sole trader |

## Sole trader National Insurance, 2026-27

Class 4 National Insurance on trading profit.

| Threshold or rate | Amount |
| --- | --- |
| Lower profits limit | £12,570 |
| Upper profits limit | £50,270 |
| Rate between the limits | 6% |
| Rate above the upper limit | 2% |

## Dividend tax rates

Dividends covered by unused Personal Allowance, and then by the dividend allowance, are taxed at 0%.

| Tax year | Dividend allowance | Basic rate band | Higher rate band | Additional rate band |
| --- | --- | --- | --- | --- |
| 2026-27 | £500 | 10.75% | 35.75% | 39.35% |
| 2025-26 | £500 | 8.75% | 33.75% | 39.35% |

## Frequently asked questions

### At what profit does a limited company save tax?

On tax alone, with all the profit taken out, the sole trader takes home more at every profit in the table for 2026-27, by between £20.68 at £60,000 and £6,719.23 at £150,000. A company can still come out ahead if you leave profit in it rather than drawing it all, which the comparison does not assume.

### Do you pay less tax as a limited company than as a sole trader?

It depends on the profit and how much you take out. A sole trader pays income tax and Class 4 National Insurance on the whole profit. A company pays corporation tax, and the owner pays income tax on the salary and dividends taken. The calculator shows both for your figure.

### Does a sole trader pay tax on profit left in the business?

Yes. A sole trader is taxed on the whole profit for the year whether or not it is drawn. Profit kept in a company bears corporation tax only, until it is paid out.

### What extra filing does a limited company have?

Annual accounts and a confirmation statement at Companies House, a Company Tax Return (CT600) with HMRC, and payroll returns if it pays a salary.

## Related calculators

- [Salary vs Dividend Calculator](https://www.taxoptimiser.co.uk/calculators/salary-vs-dividend.md): Compare the standard director salary levels and see which leaves the most take-home pay.
- [Corporation Tax Calculator](https://www.taxoptimiser.co.uk/calculators/corporation-tax.md): Estimate Corporation Tax for a UK limited company with marginal relief.
- [MTD for Income Tax Checker](https://www.taxoptimiser.co.uk/calculators/mtd-income-tax-checker.md): Check when Making Tax Digital for Income Tax applies to you, and your deadlines.
- [Dividend Tax Calculator](https://www.taxoptimiser.co.uk/calculators/dividend-tax.md): Income tax on dividends on top of your salary, band by band.

## Sources

- [Income Tax rates and Personal Allowances](https://www.gov.uk/income-tax-rates) (GOV.UK)
- [Self-employed National Insurance rates](https://www.gov.uk/self-employed-national-insurance-rates) (GOV.UK)
- [Corporation Tax rates and allowances](https://www.gov.uk/corporation-tax-rates) (GOV.UK)
- [Tax on dividends](https://www.gov.uk/tax-on-dividends) (GOV.UK)
- [Rates and thresholds for employers 2026 to 2027](https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2026-to-2027) (GOV.UK)

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Last updated 11 October 2026. Guidance only: a general estimate, not tax advice. Published by Tax Optimiser, UK tax filing software (https://www.taxoptimiser.co.uk).