2026/27 business tax comparison

Sole trader vs limited company calculator.

Compare estimated annual and monthly take-home for a sole trader and a single-director limited company. Enter annual profit from £14,000 to £99,000 to see how income tax, National Insurance, corporation tax and dividend tax affect the result.

Uses England, Wales and Northern Ireland income tax rates. Scottish income tax rates are not included.

The £14,000 minimum covers the assumed £12,570 director salary and £1,135.50 employer NIC, so both options can be compared without assuming extra funding.

Compare your take-home

2026/27 take-home calculator

Sole trader or limited company?

Compare how much of your annual profit you could keep.

Assumptions & how this is calculated

2026/27 rates for England, Wales and Northern Ireland. Scottish income tax rates are not covered. Profits are limited to £14,000–£99,000; above this range, consult a qualified accountant about personal allowance taper and other tax interactions.
Full personal allowance of £12,570. Income tax is 20% on the next £37,700 (up to £50,270 total income), then 40% up to £125,140. The personal allowance is not tapered within this calculator’s range.
Sole trader: Class 4 NIC is 6% on profits over £12,570 up to £50,270, then 2% above. No Class 2 NIC payment is included, following the April 2024 change.
Limited company: annual director salary is fixed at £12,570, with no employee income tax or NIC. This salary is included in take-home, not an extra tax charge.
The £14,000 minimum ensures profit covers the assumed £12,570 director salary and £1,135.50 employer NIC without extra funding.
Employer NIC is 15% above the £5,000 secondary threshold: (£12,570 − £5,000) × 15% = £1,135.50. Both salary and employer NIC are deducted before corporation tax.
Corporation tax is 19% up to £50,000 taxable profit and 25% at £250,000 or more. Between these limits, tax is 25% of taxable profit less marginal relief of (£250,000 − taxable profit) × 3/200. Assumes a 12-month accounting period, no associated companies and no other augmented profits.
All profit after corporation tax is paid as dividends. The first £500 is taxed at 0% but still uses the basic rate band. With salary using the personal allowance, the first £37,700 of dividends falls in the basic rate band; dividends above this fall in the higher rate band.
Dividend rates are 10.75% basic, 35.75% higher and 39.35% additional. The additional rate does not arise within this calculator’s range.
No pension contributions, other income, student loan repayments, benefits or Employment Allowance (single director company). Additional company running costs are excluded. Monthly figures are annual take-home divided by 12; figures are rounded for display only.

Rate sources: Dividend tax · Self-employed NIC · Employer rates · Marginal relief

Using the comparison

Start with profit, not turnover.

Enter profit after business expenses

Use annual income less business expenses, before personal tax or director pay. Turnover is the total income coming into the business; it does not account for the costs of earning that income. Using turnover would overstate the profit available.

Read the full breakdown

The sole trader calculation deducts income tax and Class 4 National Insurance. The company calculation deducts director salary and employer NIC before corporation tax, then adds salary to dividends after personal dividend tax to estimate take-home.

Worked example

What happens at £60,000 annual profit?

Under this calculator’s assumptions, estimated annual take-home is £46,111.40 as a sole trader and £46,091.20 through a limited company. The sole trader estimate is £20.20 higher. The direction and size of the difference depend on your profit and the assumptions.

This example includes a £12,570 director salary, £1,135.50 employer NIC, full extraction of remaining company profit as dividends and the 2026/27 dividend tax rates. It excludes extra company running costs, pensions and other income. The calculator keeps full precision until displaying the results.

Beyond the tax estimate

Is a limited company always better than a sole trader?

No. A company can produce a different tax result, but the structure also affects administration, responsibilities and the way you take money from the business. A small estimated tax difference should be considered alongside the additional costs of running a company.

What does this calculator leave out?

It excludes pension contributions, other income, student loan repayments, benefits, Employment Allowance and additional company running costs. It assumes one director, no associated companies, a full 12-month company accounting period and no other augmented profits. Open the assumptions panel for the detailed tax model.

Why is the maximum profit £99,000?

The calculator is intentionally limited to the supplied profit range. Above this range, personal allowance taper and other interactions need a wider review of your circumstances. Speak to a qualified accountant for a personalised comparison.

Why is the director salary shown separately?

The £12,570 salary is a deductible company expense and part of the director’s take-home. Employer NIC is also deducted before corporation tax. The company’s take-home result is salary plus dividends after dividend tax, so salary should not be deducted again from that result.

Are the monthly results a prediction of monthly cash flow?

No. They divide estimated annual take-home by 12. They do not model when customers pay, business expenses, tax payment dates or the timing of salary and dividend payments.

Put the numbers in context.

Talk through your business needs with Bee Accountant, or explore bookkeeping support to keep the records behind your decisions organised.

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