Money · Ltd vs sole trader
Ltd Company vs Sole Trader Check
At what income does incorporating actually save money versus trading as a sole trader, once accountancy costs, dividend tax, and admin overhead are included?
Instant result
Plain-English why
Copyable takeaway
What this means
No waffle. Just the number and how it was worked out.
Formula used
Sole trader tax = income tax + NI on profit. Ltd company take = salary (below NI threshold) + dividends. Break-even = point where ltd tax + accountancy cost < sole trader tax.
Worked example
At £50,000 profit with £2,000 accountancy costs, a ltd company typically saves £2,000–£4,000 in tax versus sole trader. At £30,000 profit, the saving often disappears once accountancy is included.
Common questions
Why does the accountancy cost matter so much?
A limited company requires annual accounts, a confirmation statement, corporation tax filing, and often payroll. A qualified accountant typically charges £1,500–£3,000 per year. At lower profit levels, this wipes out the tax advantage entirely.
What if I am also employed elsewhere?
If you are already employed, your primary income has already consumed your personal allowance and basic-rate band. The ltd company calculation changes because you will pay higher-rate tax on dividends sooner. The tool adjusts for this.
Plain-English summary
The result summary for this calculator will live here.
This section translates the result into a short, direct takeaway rather than leaving the page at a bare number.
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