Sole trader or limited company?
Enter your annual profit to see what you could keep after tax with each.
Your estimated annual take-home
Sole trader
£40,268.20
Limited company
£38,861.96
Sole-trader estimate higher by £1,406.24
Same profit, fully withdrawn, with no other income.
Accountancy fees and formation or admin costs are excluded. These can change the practical decision.
A tax-only planning estimate for a full-year trader below State Pension age, not a recommendation to incorporate.
See the calculation
Sole-trader calculation
- Trading profit
- £50,000.00
- Income Tax
- £7,486.00
- Class 4 National Insurance
- £2,245.80
- Class 2 National Insurance
- £0.00
- Estimated take-home
- £40,268.20
Class 2 contributions are treated as paid; no cash payment is deducted.
Company calculation
- Profit before director pay
- £50,000.00
- Employer National Insurance
- £1,135.50
- Corporation Tax
- £6,895.96
- Salary paid to you
- £12,570.00
- Dividend paid to you
- £29,398.55
- Personal tax and National Insurance
- £3,106.59
- Estimated take-home
- £38,861.96
Salary plus dividends, less personal deductions. This is the highest estimated take-home among the salary and dividend combinations tested.
How this comparison works
Both sides start with £50,000 taxable trading profit in 2026/27, using England, Wales or Northern Ireland Income Tax rates. The sole-trader estimate deducts Income Tax and self-employed National Insurance. The company pays salary, employer National Insurance and Corporation Tax, then distributes all remaining current profit as dividends.
This assumes one UK-resident adult with one business, trading for the full tax year, below State Pension age throughout. The company has one shareholder-director, a simple 12-month period, no associated companies, no Employment Allowance and no prior-year reserves.
Other income, losses, pensions, Gift Aid, benefits and student loans are excluded, as are voluntary contributions, specialist National Insurance rules, annual contribution limits, part-year trading and basis-period transition profit or its spreading. The same profit must be taxable on both sides; differences in deductible expenses, accounting basis and capital allowances are outside this comparison.
Class 2 payment and treated-as-paid rules depend on the year and profit. This estimate does not establish your National Insurance record or State Pension entitlement. Tax-return rounding, payment dates and payments on account are outside its scope. Legal liability, administration and other non-tax obligations also matter when choosing a business structure.
Read the methodology and estimate limits, HMRC National Insurance rates and Class 2 payment rules. Verify material decisions with a qualified professional.
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