See what you'd actually keep as a sole trader versus a limited company, at your numbers, not a rule of thumb.
Tax year 2026/27 · England, Wales & NI
£
On tax, at £60,000 it’s roughly a wash.
The tax works out about the same, so a sole trader is often the simpler, lower-admin choice at this level.
This compares the tax only, and it assumes you take all the profit out. If you can leave some in the company, the limited option gets better. And tax is just one part of the decision, here is what else matters.
Sole trader keeps more
£46,111
take-home a year · 23% effective tax
To you £46,11177%
To HMRC £13,88923%
Income tax
Profit£60,000
Less personal allowance−£12,570
Taxable£47,430
£37,700 at 20%£7,540
£9,730 at 40%£3,892
Income tax£11,432
National Insurance
£37,700 at 6%£2,262
£9,730 at 2%£195
Class 4 NI£2,457
Class 2 NI£0
Class 2 is treated as paid at this profit level, so there is nothing to pay.
Limited company keeps more
£46,091
take-home a year · 23% effective tax
To you £46,09177%
To HMRC £13,90923%
Getting to the company’s taxable profit
Profit£60,000
Less director’s salary−£12,570
Less employer’s NI−£1,136
Taxable for corporation tax£46,295
Corporation tax
19% small profits rate£8,796
Employer’s National Insurance
£7,570 at 15%£1,136
Dividend tax
Dividends after corporation tax£37,499
£500 allowance at 0%£0
£36,999 at 10.75%£3,977
Dividend tax£3,977
Assumes a £12,570 salary (within your personal allowance, so no income tax or employee NI on it) with the rest taken as dividends. It also assumes a single director with no other employees, so the Employment Allowance does not apply.
to youto HMRC
The tax is only half the story
This tool compares the tax. But the tax is rarely the only reason, or even the main reason, to pick one over the other. Weigh these up too.
Protection
A limited company puts a legal wall between the business and your personal home and savings. As a sole trader there is no wall, it is all you. For some businesses that risk is tiny, for others it is the whole reason to incorporate.
Control over your own tax
As a company owner you choose how much to take, and when. You do not have to draw every penny, so you can smooth your income across years and avoid being pushed into the higher rates in a bumper year.
Credibility
Some clients, suppliers and lenders prefer dealing with a limited company. For plenty of others it makes no difference at all.
Admin, cost and privacy
A company means more paperwork, higher accountancy fees, and your details on the public record at Companies House. A sole trader is simpler and more private.
How this is worked out. A like-for-like comparison at the same profit. The limited-company figure assumes a single director on a £12,570 salary with the rest drawn as dividends, and that you take all the profit out each year. Leaving money in the company can improve the limited-company position. It uses 2026/27 rates for England, Wales and Northern Ireland. It doesn't account for other income, pensions, student loans or associated companies.
This is an estimate to help you think, not personal advice. The right structure depends on your whole picture, which is exactly the kind of thing we work through with clients at striveX.