Take-Home Pay Calculator
Should you operate as a sole trader or set up a limited company? Enter your expected revenue and expenses to see exactly how much you'll take home under each structure — with a full tax breakdown.
Tax year 2026/27· Updated with current HMRC rates
Your details
Enter your expected annual figures. Results update instantly.
Total income before any deductions
Allowable costs (software, equipment, travel, etc.)
Sole Trader
£36,378
19.2% effective tax rate
£3,032/month · £700/week
Limited Company
£35,247
21.7% effective tax rate
£2,937/month · £678/week
Where your revenue goes
Sole Trader
Limited Company
Sole Trader Breakdown
Better optionLimited Company Breakdown
Don't forget these costs
The comparison above shows raw tax differences. In practice, a limited company also means:
- • Accountant fees: £1,000-2,000/year for a ltd company vs £200-500 as sole trader
- • Companies House filing: Annual confirmation statement (£13/year) + annual accounts
- • Admin time: Payroll, VAT returns, board minutes, dividend vouchers
- • Professional indemnity insurance may cost more through a ltd company
- • At your income level, the accountant fees alone could wipe out the tax saving of a limited company
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How this works
- Based on HMRC 2026/27 tax rates, NIC thresholds, and corporation tax rates.
- Sole trader: income tax + Class 2 & 4 NICs on taxable profits.
- Limited company: director salary of £12,570, remainder as dividends. No employment allowance (single-director company).
- Corporation tax marginal relief applied for profits between £50,000-£250,000.
- Does not account for: accountant fees, flat rate VAT scheme, R&D tax credits, or multiple shareholders.
- Always consult a qualified accountant for advice specific to your situation.
Sole Trader vs Limited Company: Which is better?
One of the most common questions for UK freelancers is whether to operate as a sole trader or incorporate as a limited company. The answer depends primarily on your income level, but there are other factors to consider.
When sole trader makes sense
If your taxable profits are below around £30,000-35,000, the administrative overhead of a limited company (annual accounts, Corporation Tax returns, Companies House filings) usually outweighs the tax savings. Sole trader is simpler: you just file a Self Assessment tax return each year.
When a limited company saves money
With the 2026/27 dividend tax increases (basic rate now 10.75%), the crossover point has shifted upward. Below £50,000 profit, the tax saving from a limited company is minimal and often wiped out by higher accountant fees. Above £60,000-80,000, a limited company typically saves several thousand pounds per year.
Other factors to consider
- Limited companies offer personal liability protection
- Some clients (especially in contracting) require you to have a limited company
- Accounting fees are higher for limited companies (typically £100-200/month vs £20-50)
- IR35 rules may mean you're taxed as an employee regardless of structure
- Limited companies can retain profits in the business for future use
This information is for guidance only. Tax rules change regularly and individual circumstances vary. Always consult a qualified accountant before making decisions about your business structure.