Sole Trader vs Ltd Comparison Table
Side-by-side take-home pay comparison at 7 different profit levels (£20K-£100K).
Last updated: April 2026 · Source: GOV.UK – Working for Yourself
Side-by-side comparison at different profit levels (2025/26 rates)
| Profit | Sole Trader | Ltd Company | Saving |
|---|---|---|---|
| £20,000.00 | £17,888.80 | £16,066.17 | -£1,822.63 |
| £30,000.00 | £25,288.80 | £23,457.42 | -£1,831.38 |
| £40,000.00 | £32,688.80 | £30,848.67 | -£1,840.13 |
| £50,000.00 | £40,088.80 | £38,239.92 | -£1,848.88 |
| £60,000.00 | £45,932.00 | £45,631.17 | -£300.83 |
| £75,000.00 | £54,632.00 | £53,362.17 | -£1,269.83 |
| £100,000.00 | £69,132.00 | £70,471.55 | +£1,339.55 |
Ltd assumes: £12,570 salary + dividends, ~£1,200 accountancy. Below ~£35K sole trader is simpler. Above ~£50K Ltd usually saves significantly. Consider IR35, mortgage implications and admin burden.
Disclaimer
This calculator is provided for informational purposes only and should not be considered as financial or tax advice. All calculations are performed locally in your browser — no personal data is collected or sent to our servers. Rates and thresholds are sourced from HMRC and GOV.UK and are updated for the current tax year. Always verify results with HMRC or consult a qualified professional before making financial decisions.
How It Works
This comparison generates a side-by-side table at multiple profit levels from £20,000 to £100,000, showing the total tax burden and take-home pay under each business structure. For the sole trader column, each profit level is run through the full Income Tax bands (20%/40%/45% after the £12,570 Personal Allowance), Class 2 NI (£179.40/year), and Class 4 NI (6% on £12,570–£50,270, 2% above). The result is the net income the sole trader retains.
For the limited company column, the calculation assumes an optimal extraction strategy: salary set at the Personal Allowance level of £12,570 (minimising NI), with remaining profits subject to Corporation Tax and then withdrawn as dividends. Corporation Tax rates are applied using the marginal relief formula for profits between £50,000 and £250,000 (effective rate rising from 19% to 25%). Dividend tax is calculated at 8.75%/33.75%/39.35% after the £500 dividend allowance.
The comparison accounts for the additional running costs of a limited company—typically £1,000–£2,000 per year for accountancy, Companies House filing fees (£13), and Confirmation Statement fees (£34). These are deducted from the Ltd take-home to give a fair like-for-like comparison. The table clearly shows the crossover point where Ltd becomes more tax-efficient and quantifies the annual saving or cost at each profit level, helping business owners make an informed structural decision.
Comparison table at £40,000 profit
- Sole trader at £40,000: IT £5,486 + Class 2 £179 + Class 4 £1,646 = £7,311. Take-home: £32,689.
- Ltd at £40,000: salary £12,570 (no tax/NI). Profit after salary: £27,430.
- Corporation Tax: £27,430 × 19% = £5,212. Available for dividends: £22,218.
- Dividend tax: £500 free, £21,718 × 8.75% = £1,900. Accountancy fees: £1,200.
- Ltd take-home: £12,570 + £22,218 − £1,900 − £1,200 = £31,688. Sole trader wins by £1,001 at this level.
Source: GOV.UK – Working for Yourself
Frequently Asked Questions
- What does the Sole Trader vs Ltd Comparison Table do?
- Side-by-side take-home pay comparison at 7 different profit levels (£20K-£100K). All calculations are performed in your browser using official UK rates and thresholds.
- Is this suitable for my business?
- This calculator provides general estimates based on standard UK business rates and rules. Every business is different — consult your accountant for advice specific to your circumstances.
- Does this use 2025/26 tax rates?
- Yes. All rates and thresholds are based on the current 2025/26 UK tax year. Corporation Tax main rate is 25% for profits over £250,000, with a 19% small profits rate.