Sole trader or limited company?
Put your profit in and see what you would actually keep each way, after tax, National Insurance and the extra accountancy costs a company brings. 2026/27 rates.
Sole trader
Limited company
An estimate for 2026/27, rates checked 2026-11-10. It assumes a director salary at the National Insurance secondary threshold with the balance as dividends, no other income, no pension contributions and no student loan. It ignores limited liability, which is often the more important question. Your actual position depends on details this tool cannot see, we will model it properly for free.
What the numbers do not tell you
Tax is rarely the whole decision. A limited company gives you limited liability, which genuinely matters if you carry stock, employ people or sign leases, and is close to irrelevant for a freelance consultant. It also makes your accounts and your name public at Companies House, which some people mind a great deal.
A company is also considerably harder to close than to open. If the saving is a few hundred pounds a year, it is usually not worth the paperwork.
Frequently asked questions
At what profit does a limited company become worth it?
There is no longer a clean threshold, which surprises people. Since Class 4 National Insurance fell from 9% to 6% in 2024, a sole trader drawing all their profit is usually slightly ahead at any level. The company only wins once you leave profit in the business: try the retention options above and watch the answer flip.
Does this calculator account for the extra accountancy fees?
Yes. It assumes roughly £450 a year more for a company than a sole trader, which reflects our own pricing, £599 for company accounts against £149 for a tax return. Adjust your expectations if your situation is more complex.
Why does the saving shrink if I withdraw everything?
Because profit left in the company only bears Corporation Tax at 19%. The moment you take it as a dividend you pay dividend tax on top, which narrows the gap against sole trader Income Tax and National Insurance considerably.
What does the calculator not include?
Pension contributions, student loan repayments, other income, the High Income Child Benefit Charge, VAT, and any benefits in kind. It also ignores limited liability, which for some businesses matters more than the tax.
Should I incorporate just for the tax saving?
Not on its own. A company is harder to close than to open, your accounts become public, and the admin roughly doubles. If the saving is a few hundred pounds, it is usually not worth it.