Home / Sole Trader vs Limited Company
Enter your annual profit and compare your estimated take-home pay as a sole trader versus a limited company director for 2025/26.
Enter profit after business expenses, before personal tax.
Limited company model assumes: director salary £12,570, employer NI threshold £5,000 at 15% (2025/26), corporation tax 19% (up to £50k profit), dividend allowance £500, basic rate dividend tax 8.75%. Accountancy fees and other Ltd costs not included. Always consult a qualified accountant before changing your business structure.
There is no single right answer — it depends on your profit level, risk tolerance, and circumstances. Here is a practical comparison:
| Factor | Sole Trader | Limited Company |
|---|---|---|
| Setup | Simple — register with HMRC | Companies House registration required |
| Tax efficiency | Less efficient above ~£30k profit | More efficient above ~£30k profit |
| Admin | Simple — one Self Assessment | Higher — company accounts, CT returns |
| Liability | Unlimited personal liability | Limited liability protection |
| Accountancy cost | £200–£500/year | £1,000–£2,500/year |
| Credibility | Fine for most trades | May help with larger contracts |
As a rough rule: if your profit is consistently above £30,000–£35,000 per year, a limited company is likely more tax-efficient — but the admin overhead and accountancy costs must be factored in.
These specialist accountants handle company formation, payroll, dividends, and CT returns for contractors and small businesses.
Crunch
Online accountants for Ltd companies
Gorilla Accounting
Contractor & Ltd specialists
FreeAgent
Ltd company accounting software
We may earn a commission if you sign up via these links, at no extra cost to you.