Sole Trader vs Limited Company Calculator

After the 2024 tax changes (employer NI up to 15% from £5,000, Corporation Tax 25% above £50k with marginal relief, dividend allowance cut to £500), the crossover has moved up. For most service businesses, the break-even sits around £55,000–£80,000 of profit, assuming an optimal salary strategy. Below £50,000 profit, incorporation is rarely worth it because fixed accountancy costs (~£1,300/yr) wipe out any saving.

Yes — it uses HMRC rates for the 2026/27 tax year (6 April 2025 to 5 April 2026): £12,570 personal allowance, 20%/40%/45% income tax, Class 4 NI at 6%/2%, employee NI at 8%/2%, employer NI at 15% above £5,000, Corporation Tax at 19% (small profits) to 25% (main rate), and the £500 dividend allowance.

Because they are real costs of running a limited company. Employer NI (15% above £5,000) is paid by the company on any salary above the secondary threshold. Accountancy for a micro-entity company typically runs £900–£2,000 per year because of statutory accounts, the CT600, confirmation statement and payroll — far more than a sole-trader Self Assessment return.

We use the legislated 2026/27 rate: employer NI at 15% on salary above £5,000, with no Employment Allowance assumed (single-director companies generally can’t claim it). This is a significant change from the previous £5,000 threshold at 15% and materially affects the Ltd vs sole-trader math.

For a single-director company with no other income, taking a salary at exactly the £12,570 personal allowance is usually tax-efficient: no income tax, no employee NI. Employer NI kicks in on the slice from £5,000–£12,570, but this is offset because the salary is a corporate tax-deductible expense. Slide the "Take as salary" control to around 25% of profit on £50k; 12–20% on higher profits.

Yes. When you select Scotland, the tool applies Scottish income tax bands (starter 19%, basic 20%, intermediate 21%, higher 42%, advanced 45%, top 48%) to your salary or sole-trader profit. Dividend tax remains the same UK-wide.

Yes. For profits between £50,000 and £250,000, we apply the marginal relief formula: main-rate tax (25%) minus (£250,000 − profit) × 3⁄200. This produces an effective rate of roughly 26.5% on the marginal slice, which is HMRC’s intended outcome.

If your contract is inside IR35, most of your income is treated as salary and the Ltd-company advantage largely disappears. This tool assumes you’re outside IR35. If you’re inside IR35, the sole-trader outcome is usually a better proxy for your actual take-home pay.

We don’t factor in: student loan repayments, the High-Income Child Benefit Charge, the £100k Personal Allowance taper, VAT (the £90,000 threshold affects pricing not tax), capital gains on selling the company, Business Asset Disposal Relief, or the time cost of running a company. Talk to an accountant before any decision above £80k profit.

No. Everything runs in your browser. We don’t log revenue, expenses or any other figures you enter. Refreshing the page resets it all.