Sole Trader vs Limited Company Calculator

Enter your annual profit to compare the tax you would pay as a sole trader with running the same business through a limited company.

Your business

Tax year

Annual profit (£)

GBP

I pay Scottish income tax

Being a sole trader leaves you

£20.68

more a year after tax, before running costs

Sole trader take-home

£46,111.40

£13,889 tax

Limited company take-home

£46,090.72

£13,909 tax

Side by side

	Sole trader	Limited company
Profit	60,000.00	60,000.00
SalaryPaid by the company to its director	—	12,570.00
Employer's National Insurance	—	1,135.50
Corporation Tax	—	8,795.86
Dividend	—	37,498.00
Income tax	11,432.00	3,977.28
National InsuranceClass 4 for a sole trader, employee's Class 1 for a director	2,456.60	0.00
Total tax	13,888.60	13,908.64
Take-home	46,111.40	46,090.72

Estimate only. Tax alone, with no other income. The limited company figures use the salary that gives the highest take-home and pay out all remaining profit as a dividend; a company also costs more to run (accounts, a Company Tax Return and payroll) and lets you leave profit undrawn. No voluntary Class 2 National Insurance is included for the sole trader.

Guidance only. This calculator gives a general estimate and is not tax advice. Speak to your accountant before relying on these figures or making any decisions based on them.

How each is taxed

A sole trader pays income tax and Class 4 National Insurance on the whole profit, whether or not it is drawn. A company pays corporation tax on its profit, and the owner then pays income tax on the salary and dividends taken out.

Tax is not the whole picture

A company must file annual accounts and a confirmation statement at Companies House and a CT600 with HMRC, and run a payroll if it pays a salary. It also gives limited liability and lets you leave profit in the company rather than drawing it all. The comparison here assumes all profit is taken out each year.

Need to file the CT600?

This calculator is for guidance only. Tax Optimiser prepares the full corporation tax computation and files the CT600 and accounts with HMRC and Companies House.