Sole trader vs limited company comparator

This tool assumes:

• Sole trader: Class 4 NI (6% / 2%), Class 2 voluntary below £6,845 SPT, income tax on profit using 2025-26 EW&NI bands.
• Limited company default split: salary at the NI Secondary Threshold (no employer NI), remainder paid as dividends.
• Corporation Tax: 19% on profits up to £50,000; 25% above £250,000; marginal relief between (effective ~26.5% on the slice).
• Dividend tax: £500 dividend allowance, then 8.75% basic / 33.75% higher / 39.35% additional rate (2025-26).
• Comparison ignores accountancy fees, Companies House filings, and IR35 — limited company has higher admin and reporting overhead.

Primary sources:

• HMRC: Rates and allowances for Income Tax
• HMRC: Corporation Tax rates
• HMRC: Tax on dividends
• HMRC: Self-employed National Insurance rates