Sole trader vs limited company tax calculator 2026/27
Compare a sole-trader outcome with an illustrative salary-and-dividend company extraction from the same business profit.
How the Sole trader vs company estimate works
This comparison applies sole-trader Income Tax and Class 4 NI to profit, then contrasts a simplified company route using salary, employer NI, Corporation Tax and dividends. It is a tax-model comparison, not a recommendation about structure.
Rules checked
Read the checking method
What the result includes
- Sole-trader profit tax and Class 4 NI
- Company salary, employer NI, Corporation Tax and dividend tax
- A visible cash difference under fixed assumptions
What to have ready
- Expected annual profit before owner extraction
- Other personal income and tax region
- Likely company running costs, added separately if material
Questions about Sole trader vs company
Does the larger result identify the best legal structure?
No. Administration, limited liability, timing, losses, benefits, financing and commercial needs can outweigh a simplified tax difference.
Is Employment Allowance included for the company?
No. The comparison makes no Employment Allowance claim, which avoids assuming eligibility for a single-owner company.
About this estimate
This is a tax illustration, not a recommendation on legal structure. Accountancy costs, retained profit, pensions, benefits, losses, VAT, liability and administration matter too.