Limited Company or Sole Trader Tax Calculator

Sole traders do start paying tax at a higher rate than limited companies, but this can vary depending on how much profit your business makes, as well as any other income you might have. Choosing one business structure instead of another isn't just about tax efficiency though, and there might be other important points to consider, such as personal liability!

Being a sole trader means there’s no legal distinction between you and the business, so although you’re ‘self-employed’, you can’t ‘employ yourself’. You’ll pay income tax on any profits you make, even if you don’t use them personally.

Company directors can take a salary and dividends if that’s more tax efficient. You can use our dividend tax calculator to work out the tax you’ll pay on dividends and other income.

Our tax comparison calculator shows how much tax you will pay on your profits, assuming you don’t have other income.

Earnings from somewhere else, such as an employer or property, will affect things like your tax-free allowance, which the calculator won’t show.

If you need more detailed information, then please talk to your accountant or one of the team by calling 020 3355 4047 or open a Live Chat.

Earning profits above £50,000 can often mean it's more tax efficient to operate as a company rather than as a sole trader, but with lots of other factors to consider you should consult your accountant before deciding anything! They'll be able to help you work out what suits you best, and advise what other options are available.

A limited company is a separate legal entity to the people who own and manage it, whereas sole traders are the business.

This is a key consideration which affects everything from how you pay yourself, to how you’re taxed, and who is liable if the business fails. It’s quite a complicated point, so we go into more detail about business structures in this article.