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Compare · 2026/27
Sole trader or Limited?
The honest answer: depends on your profit. Slide the figure below and we'll show you both routes side-by-side, with the full breakdown — and where the crossover sits.
£10k£250k
Sole trader
Self assessment
net take-home
Profit£60,000£60,000
Income tax−£11,432£11,432
Class 4 NI−£2,457£2,457
Total deducted−£13,889£13,889
Limited company
Salary + dividend
net take-home
Salary (PA-optimised)£12,570£12,570
Employer NI−£520£520
Corporation tax−£8,913£8,913
Dividend (gross)£37,997£37,997
Dividend tax−£3,355£3,355
Total tax + NI−£12,788£12,788
Verdict
Limited wins by £1,100£1,100 /yr. Worth it once you factor in the extra admin (~£300–600/yr accountant) — and only if cashflow lets you pay yourself this way.
When sole-trader wins
- · Profit under ~£30k — running a company costs more than it saves.
- · You want to keep accounting simple — one self-assessment, no Companies House.
- · You're starting out and unsure about the business sticking.
When Limited wins
- · Profit £30k+ and growing — dividend tax beats Class 4 NI + income tax.
- · You want limited liability (a client owing £40k can sink a sole trader).
- · You're contracting and need to prove inside/outside IR35 status.
- · You want to leave profits in the company for the next investment.