Sole Trader vs Limited Company Calculator 2026/27
Should you incorporate? This calculator compares your total tax bill under both structures — sole trader (income tax + Class 2/4 NI) versus limited company (Corporation Tax + salary + dividends) — at your specific profit level.
How the comparison works
Enter your annual business profit and the calculator estimates:
- Sole trader: income tax + Class 2 NI + Class 4 NI on your profit
- Limited company: Corporation Tax (25%) + income tax and NI on an optimal salary + dividend tax on the remainder
The difference shows you how much you could save (or lose) by incorporating.
Important considerations
- Accounting fees for a limited company typically cost £1,000–£2,500/year
- A limited company must file annual accounts with Companies House
- Your personal finances and company finances must be kept separate
- IR35 rules may prevent the limited company structure if you work for a single client
General tipping point
The tax saving from incorporating typically becomes worthwhile at profits of £40,000–£50,000/year, after accounting for the additional administration costs. Below this level, the simplicity of sole trader status usually outweighs the modest tax saving.
Detailed guide
For a full breakdown of both structures with worked examples, see our sole trader vs limited company guide. For the director's salary/dividend split, see director's salary vs dividends.