Hammer & Ledger Tax Tool
Sole trader or Limited company: Which Leaves You Better Off?
Use this calculator to compare your estimated take-home pay as a sole trader against a limited company. You can also choose how much dividend you want to take, so you can see when keeping money inside the company helps — and when taking too much out removes the benefit.
£
Your total sales or fees before deducting costs.
£
Enter normal allowable business costs. Do not include director salary here.
Most one-person director companies cannot claim this allowance.
£
Leave blank if you want to take all available company profit personally.
Your result
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Your dividend planning note will appear here after the calculation.
Sole trader
Simple structure: income tax and self-employed NI
Income
Profit before tax£0
Personal Allowance£0
Income taxed after allowances£0
Tax and NI
Income tax£0
Class 4 NI£0
Compulsory Class 2 NI£0
Paid to HMRC
£0
Personal Take-Home
£0
Limited company
Director salary taken first plus selected dividends
Salary and NI
Director salary taken first£0
Income tax on salary£0
Employee NI on salary£0
Employer NI paid by company£0
Company Tax
Company profit after salary/ER NI£0
Corporation Tax£0
Corporation Tax marginal relief£0
Profit available after Corporation Tax£0
Dividend Decision
Dividend taken personally£0
Dividend allowance used£0
Dividend tax£0
Profit left inside the company£0
Paid to HMRC
£0
Personal take-home
£0
Take-home + company cash retained
£0
What This Comparison Really Means
A limited company is not automatically better. The answer depends on how much profit you take personally, how much you retain, and whether the commercial benefits of a company matter to you.
Common misconceptions
- “Limited companies always save tax” — not always, especially if profits are fully withdrawn.
- Corporation Tax is not the final tax if the owner needs the money personally.
- A £12,570 salary may not stay fully tax-free if total income removes your Personal Allowance.
When a limited company can work better
- You keep profits in the company for vans, equipment, staff, growth or future planning.
- You want limited liability and a more formal business structure.
- Pension contributions or genuine family share planning are relevant.
Where Sole trader Can Be Better
- You take nearly all profits out personally each year.
- You want simpler admin and lower accountancy/compliance costs.
- The business has lower risk and does not need company credibility.
Important assumptions: This uses 2026/27 England, Wales and Northern Ireland tax rates. It assumes no other income, pension contributions, student loan, VAT, associated companies, benefits in kind or timing differences. Figures are estimates and should not be treated as personal tax advice.
Need help choosing the right structure?
The right answer depends on how much you extract, what you retain, your risk level, vehicles, pensions, family planning and admin costs.
Speak to H&L →This calculator is for illustration only and is not professional tax advice. Speak to Hammer and Ledger.
