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Sole trader or limited company?
Find out in 30 seconds.
Compare your take-home pay both ways on 2026/27 rates. If a limited company comes out ahead, we will incorporate you for free.
If the calculator shows limited company wins, we will form your company free of charge. The 60-minute audit is yours either way.
Corporation tax, dividend tax, NICs, what lands in your pocket and what stays protected in the company.
Run your numbers
Use the calculator to see your take-home both ways.
Book the free audit
A 60-minute review with an ICAEW-qualified accountant on your real figures.
We incorporate, free
If limited is the better structure, we form your company at no cost.
The 60-Minute Tax Leak Audit
We map your real numbers against the most efficient structure for 2026/27, show you what you are leaving on the table, and hand you a one-page action plan to keep, whether you work with us or not.
Claim your free audit + incorporationShould you be a sole trader or a limited company in 2026/27?
Short answer: it now depends less on how much you earn, and more on how much you take out.
For years the rule was simple. Once profit cleared roughly £30,000, you incorporated and saved tax through dividends. The April 2026 dividend tax rise ended that. With basic-rate dividend tax now at 10.75% and the higher rate at 35.75%, taking all your profit out as dividends barely beats staying a sole trader, and at some levels it loses.
A limited company wins when you do not need all the cash each year. If you can leave profit in the business, pay into a pension through the company, or split shares with a spouse, the company pulls clearly ahead. The calculator above shows where your own numbers land.
How much profit before going limited is worth it?
No single magic number. A clear pattern.
On full extraction there is little or no saving at any level in 2026/27, and the higher accounting cost of a company can tip it negative. If you can retain profit, a limited company typically starts to win from around £60,000 to £80,000 of profit, widening as profit rises and as you add a company pension or spouse share-split.
Between roughly £40,000 and £60,000 is a grey zone where the tax difference is small, so the decision rests on liability protection, how much you reinvest, pension planning, and how larger clients see you.
Sole trader vs limited company at a glance
| Factor | Sole trader | Limited co. |
|---|---|---|
| Tax on profit | Income tax + Class 4 NIC | Corp tax 19–25% |
| Take cash as | All profit taxed as yours | Salary + dividends |
| Retain profit efficiently | No | Yes |
| Personal liability | Unlimited | Limited |
| Privacy | Private | On Companies House |
| Admin and cost | Lower | Higher |
| Pension via business | Personal only | Company deductible |
The 2026/27 tax rates this calculator uses
| Item | Rate / threshold |
|---|---|
| Personal allowance | £12,570 |
| Income tax (basic/higher/add) | 20/40/45% |
| Class 4 NIC | 6% then 2% |
| Dividend allowance | £500 |
| Dividend tax | 10.75/35.75/39.35% |
| Corporation tax | 19–25% |
HMRC 2026/27 rates, England, Wales & NI. Scottish income tax bands differ.
Common questions
10.75% basic, 35.75% higher, 39.35% additional, after a £500 allowance. Up from 8.75% and 33.75%.
Usually not. A sole director with no other employee is excluded. It is off by default here.
Yes. It has had corporation tax only. Dividend tax applies when you draw it. Retaining defers and can reduce personal tax, but is not permanently free.
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