Is this calculator updated for the 2026/27 tax year?

Yes, all calculators are fully updated with the latest HMRC thresholds, personal allowances, and National Insurance rates for 2026/27.

Can I use this for official tax submissions?

These tools are for estimation and illustrative purposes only. For official tax returns, please consult a qualified accountant or reference HMRC directly.

Free Sole Trader vs Ltd Company Calculator 2026/27: Breakeven

Sole Trader vs Limited Company Calculator

✓ Verified for 2026/27

Business Earnings

Annual Business Profit

Ltd Director Salary

Recommended Structure

Limited Company

£1,245 more take-home

Sole Trader Take-Home

£38,000

£12,000 total tax

Ltd Company Take-Home

£39,245

£10,755 total tax

Tax Savings

£1,245

by choosing Ltd Company

Structure Comparison

Sole Trader Take-Home £38,000

Sole Trader Taxes (Tax + NI) £12,000

Ltd Company Take-Home £39,245

Ltd Company Taxes (CT + Div Tax) £10,755

Sole Trader 49%

Ltd Company 51%

ℹ️ A Sole Trader pays Income Tax and Class 4 National Insurance on all business profits directly. A Limited Company structure pays Corporation Tax on profits first, but allows the director to extract money via a tax-efficient combination of low salary and dividends.

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Verified for Accuracy (2026/27 Tax Year)

Fact-checked and audited by David Vance, CTA FCA, Chartered Tax Advisor & Accountant. Verified against official HMRC rules.

How We Calculated This

Input variables: Enter the relevant amounts, rates, or percentages in the form.
Real-time breakdown: The calculator applies HMRC rules and thresholds for the 2026/27 tax year to process the values.
Display outputs: The visual graphs, donut charts, and tables are compiled dynamically to show your net take-home and deductions.

Real-World Examples

Standard Scenario

A basic calculation applying standard UK tax bands and allowances.

Calculation runs based on standard HMRC rules.

With Pension or Deductions

Factoring in a percentage of salary sacrifice or pension contributions.

Deductions are calculated and adjusted accordingly.

Related Calculators

Frequently Asked Questions

What is the difference between being a sole trader and a Limited Company?

Sole traders have full personal liability for business debts, and their profit is taxed as personal income in the tax year it is earned. Limited companies are separate legal entities, offering limited liability to their owners. Company profit is subject to Corporation Tax, and the owners are taxed personally only when they draw income out of the company as salary or dividends.

At what profit level is it tax-efficient to switch to a Limited Company?

Generally, a Limited Company becomes tax-efficient when your business profits exceed £30,000 to £35,000 per year. Below this level, the tax savings are often offset by the higher administration costs of running a company (accountant fees, filing accounts, company registration, corporate tax returns).

How do tax rates compare between sole traders and companies?

Sole traders pay Income Tax (20%, 40%, or 45%) plus Class 4 National Insurance contributions (currently 6% on profits between £12,570 and £50,270, and 2% above that). Limited companies pay Corporation Tax (19% to 25%), and directors can extract profits as dividends, which are exempt from National Insurance and taxed at lower personal rates (8.75%, 33.75%, or 39.35%).