Free tool · 2026/27 rates
Take-home pay calculator: sole trader or limited company?
This calculator takes the profit your business makes before paying you and shows what you would keep under the two common structures. As a sole trader the whole profit is your income, taxed through Self Assessment with Class 4 National Insurance on top. Through a limited company the profit is first taxed at the Corporation Tax rate, then extracted as a small salary and dividends, each taxed in its own way. The difference between the two routes changes with the level of profit, and this tool shows the figures for your number using the 2026/27 rates verified against GOV.UK. It applies the personal allowance taper above £100,000, the 2026/27 dividend rates of 10.75% and 35.75%, Class 4 at 6% and 2%, and the Scottish bands where you select them. It assumes no other income and a company director salary of £12,570.
How the calculation works
For the sole trader column, your profit is treated as taxable income. The personal allowance of £12,570 is deducted, reduced by £1 for every £2 of income over £100,000. Income tax is then charged at 20%, 40% and 45% across the UK bands, or at the six Scottish rates from 19% to 48% if you select Scotland. Class 4 National Insurance is added at 6% on profit between £12,570 and £50,270 and 2% above that. Class 2 is treated as paid automatically for profits above £7,105 and is not shown.
For the limited company column, the salary you enter is paid first, with employer National Insurance at 15% on the amount above £5,000. The remaining profit is taxed at the Corporation Tax rate: 19% up to £50,000, 25% above £250,000, with marginal relief between. Everything left after Corporation Tax is assumed to be paid out as dividends. Your personal tax is then income tax and employee National Insurance on the salary, plus dividend tax at 10.75%, 35.75% or 39.35% on dividends above the £500 allowance, using the bands your salary has not already used.
What it leaves out
The tool assumes you have no other income, that all company profit is extracted in the year, that no pension contributions are made, that the Employment Allowance does not apply (it does not for a sole-director company), and that you are not affected by the High Income Child Benefit charge. Pension contributions, retaining profit in the company, a spouse's shareholding and the choice of salary level all change the picture, and these are exactly what a tax planning review works through. The running cost of a company, typically £400 to £900 a year for accounts, Corporation Tax, payroll and the confirmation statement, is not deducted.
The figures are estimates for illustration under the 2026/27 rates and are not advice. Read our advice disclaimer.
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