Sole Trader vs Limited Company Calculator.
The incorporation question priced properly — the same profit through both structures, side by side.
Sole trader
Limited company
Sole trader pays Income Tax plus Class 4 NI on the whole profit. The company route assumes a £12,570 salary with the rest extracted as dividends after Corporation Tax — the standard efficient structure. Incorporation also changes liability, admin, pensions and perception, not just tax — Everything runs in your browser — your figures never leave it. Estimates are general information, not advice: ask us about your own position.
The structure question
One profit, two structures, an honest answer.
Every growing sole trader hears it at the pub: “you should go limited.” Sometimes it's right; often it's folklore priced years out of date. This calculator settles it with arithmetic — the same profit through both structures at 2026/27 rates. Sole trader: Income Tax plus Class 4 National Insurance on the lot. Company: a £12,570 salary, employer NI, Corporation Tax at 19–26.5%, then dividends at the new 10.75%/35.75% rates. Two “you keep” figures, no folklore.
The honest footnote: incorporation was a bigger win before Corporation Tax rose and dividend rates followed. Today the tax gap is narrower and the real case is often about the other things — limited liability, how banks and clients perceive you, pension headroom, and whether profits can be left in the company rather than drawn. Those don't fit in a calculator; they fit in a conversation about your actual plans.
Common questions.
At what profit is a limited company worth it?
There is no universal number any more. After the Corporation Tax rise and the April 2026 dividend rate rise, the pure tax saving is modest at most profit levels and the answer depends on whether you need all the profit personally — retaining profit in the company is where the structure still clearly wins. Run your own figures, then weigh the non-tax factors.
What does this calculator assume for the company route?
The standard efficient structure: a salary at the £12,570 personal allowance, employer NI where due, Corporation Tax on the remainder (including marginal relief), and the post-tax profit paid out as dividends. If you would retain profit in the company instead, the company route improves further.
What does incorporation cost in admin?
Statutory accounts, a Corporation Tax return, a confirmation statement, payroll for the salary, dividend paperwork, and a separate Self Assessment for you. It is more than a sole trader's return — which is exactly why the decision should clear the tax saving with room to spare, or be driven by liability and growth rather than tax.
Keep going.
Dividend vs Salary
Already incorporated? Fine-tune how you pay yourself.
Open →Tax Reserve Calculator
Staying sole trader? Work out the monthly put-aside instead.
Open →Company formation, guided
If the answer is yes, we set the company up properly — shares, registers, PAYE, the lot.
Open →Prefer a human with the numbers?
The right structure depends on plans, not just profit — tell us where the business is going and we'll price both routes properly.