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Sole trader vs limited company calculator

Compare take-home pay as a sole trader with running a limited company paying a salary and dividends, using 2026 to 2027 GOV.UK rates for England, Wales and Northern Ireland. Runs in your browser; nothing is stored.

How the calculator works

Sole trader: Income Tax on your profit (Personal Allowance £12,570, 20% to £50,270, 40% to £125,140, 45% above; GOV.UK) plus Class 4 National Insurance at 6% between £12,570 and £50,270 and 2% above (GOV.UK).

Limited company: the company pays your salary and employer National Insurance at 15% above £5,000 a year. Your salary has employee NI at 8% above £12,570 (GOV.UK). A company whose only employee is its single director can't claim the £10,500 Employment Allowance (GOV.UK). Corporation Tax is 19% on profits up to £50,000 and 25% over £250,000, with Marginal Relief between (standard fraction 3/200; GOV.UK). Dividends from what's left are taxed at 10.75%, 35.75% or 39.35% above a £500 allowance (GOV.UK).

What the numbers leave out

A company is a separate legal entity with its own accounts, filings and costs, so the tax saving needs to cover those (enter your estimate above). Money you leave in the company isn't taxed as dividends until you take it out. Pension contributions, IR35, student loans, other income and Scottish tax bands change the answer. Talk to an accountant before you switch.

See also the self-employed tax calculator, the day-rate calculator and VAT threshold checker, and compare accounts software: FreeAgent, Xero, Zoho Books.

Rates from GOV.UK for 2026 to 2027, checked 15 October 2026. Not tax advice.

Questions

Is a limited company more tax-efficient than being a sole trader?

It depends on your profit and costs. The calculator compares both using 2026 to 2027 rates; at lower profits the extra running costs can outweigh any saving.

What are the dividend tax rates for 2026 to 2027?

10.75% basic rate, 35.75% higher rate and 39.35% additional rate, above a £500 dividend allowance.

What salary should a director pay themselves?

Many choose a salary around the National Insurance thresholds; try different figures above. Employer NI is 15% above £5,000 a year.

Can my one-person company claim Employment Allowance?

Not if the director is the only employee liable for employer National Insurance.