This calculator supports UK/US assumptions only. Choose the applicable market in the calculator or its named UK/US tool. Israeli rules are not implemented.

UK Tax Tools · 07

Limited Company or Sole Trader?

Compare cash you can take from the same business profit in 2026/27. Company funds retained after corporation tax remain separate from personal take-home.

This scenario matches the assumptions belowEngland, Wales or Northern Ireland; UK resident below State Pension age; one full-year director and sole shareholder of a UK trading company, outside IR35. A 12-month accounting period, no associated companies, other company income, Employment Allowance, losses, pension deductions or other dividend/savings income. Other personal income must be non-savings income without NI, such as rent or pension income; other employment or self-employment is excluded because combined NI limits are not calculated. Use the same allowable expenses for both structures, including any extra company administration costs in your comparison.

Your business

Annual revenue / billing (£)

Annual business expenses (£)

Other non-savings income, excluding employment (£)

Limited Co structure

Director salary (£)

Post-tax profit to retain in company (£)

Comparison unavailable

Confirm the stated scope before using the comparison.

2026/27 England/Wales/NI scenario: personal allowance £12,570 with total-income taper; non-savings rates 20%/40%/45%; dividends 10.75%/35.75%/39.35% with a £500 zero-rate allowance occupying the bands; Class 4 NI 6%/2%, no compulsory Class 2 charge; annualized director employee NI 8%/2%, employer NI 15% above £5,000. Company tax is 19%/25% with marginal relief between £50,000 and £250,000 under the stated scope. All post-tax profit not retained is distributed. VAT, student loans, benefits and later extraction tax are excluded.

Calculation checks: 21 October 2026. Current-year illustration; no professional review is implied.

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Frequently asked questions

Why does retaining profit not reduce corporation tax?

Retaining money allocates profit after corporation tax. It reduces the dividend paid now, but the money stays in the company and later extraction may create personal tax. This tool shows it separately from personal cash.

How are other income and dividends handled?

Other income sets a personal-tax baseline. The comparison subtracts only the extra tax caused by each business route. The company calculation combines salary, other non-savings income and dividends when tapering the Personal Allowance, then layers the dividends through the current tax bands. The £500 dividend allowance still occupies band space.

Does this establish IR35 status or an optimal director salary?

No. It assumes work is outside IR35 and uses the salary you enter. IR35 and employment-status outcomes, pensions, losses, associates, short accounting periods and extra administration costs can change the comparison and require a different calculation.