What the calculator compares
Same profit, two structures, side by side:
- Sole trader — income tax plus Class 4 National Insurance on the whole profit.
- Limited company — a small £12,570 salary, corporation tax on the rest, then the balance drawn as dividends with dividend tax on top.
The difference is the annual tax saving (or cost) of incorporating, on tax alone.
Tax isn't the whole decision A limited company also gives you limited liability, more credibility with some clients, and the ability to raise investment or retain profit tax-efficiently. Against that: more admin, more filing, and your money legally being the company's until you extract it. We help you weigh all of it, not just this number.
So should you incorporate?
Because the extraction numbers are usually close, the decision rarely turns on this calculator alone. Incorporate for the structural reasons — limited liability, retaining profit at corporation-tax rates, pension planning, splitting income with a spouse, credibility or raising investment. Stay a sole trader if you value simplicity and none of those apply yet. Read the full breakdown in our comparisons, or just ask us — we'll model your exact numbers and goals.
