Hundred SummersSole trader vs limited company: the same profit, both routes
Income tax and Class 4 as a sole trader, or salary, employer NI, corporation tax and dividend tax through a company: the take-home from each on 2026/27 rules, with every line shown and the non-tax factors named honestly. Your figures never leave your browser.
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Worked example
Computed when this page was built by the same engine that runs the calculator above, so the figures below and the live tool can never disagree. Change any input above to see your own.
| Inputs | |
|---|---|
| Profit before owner's pay | £60,000 |
| Director's salary (company route) | £12,570 |
| Extra company running costs | £900 |
| Employment Allowance | Not available (sole director) |
| Tax residence | England, Wales or N. Ireland |
| Results | |
|---|---|
| Sole trader: income tax + Class 4 NI | £13,889 |
| Sole trader take-home | £46,111 |
| Company: employer NI + corporation tax + dividend tax | £13,659 |
| Company take-home (after running costs) | £45,441 |
| The sole trader keeps more by | £670 |
The next question
What does a pension contribution really cost? →Pension tax relief calculator
Or answer it with everything else: the full Hundred Summers plan connects your pay, pensions, savings, property, tax and spending year by year, and stress-tests them across 500 simulated market histories.
Read the guide
- Sole trader or limited company: the tax, and everything the tax ignores →Why the company route now loses at modest profits on 2026/27 rates and wins again higher up, what a director actually pays on salary and dividends, the Employment Allowance trap for one-person companies, and the non-tax reasons that often decide it.
Why the answer changed
For a decade the company route won comfortably at almost any profit, because dividends were taxed lightly and corporation tax was flat at 19%. Three things moved: corporation tax rose to 25% above £250,000 with marginal relief from £50,000, the dividend rates rose again from April 2026 to 10.75%, 35.75% and 39.35% with only £500 tax-free, and employer NI rose to 15% from a £5,000 threshold. At modest profits the company’s extra layers now cost more than the sole trader’s Class 4 NI at 6%; at higher profits the company still wins, and by more if profit can be retained or paid into a pension by the company.
What the calculator does and does not score
It scores tax and running costs, with all after-tax profit paid out as dividends in the year. It does not score limited liability, how lenders and clients treat each structure, IR35 if you contract through your own company, VAT, employer pension contributions (deductible against corporation tax with no NI, often the strongest company-side argument), or the option to leave profit in the company and draw it in a lower-income year. The self-employed tax calculator gives the sole trader side in detail; the dividend tax calculator the dividend side; the pension tax relief calculator what contributions do on either route.
Sources
- HMRC, Corporation Tax rates and reliefs (19%, 25%, marginal relief).
- HMRC, Employment Allowance and its eligibility (the sole-director rule).
- HMRC, National Insurance rates (employer 15% above £5,000), Class 4 rates, tax on dividends and Income Tax rates.