Tax & take-home
Different taxes and different ways to take profits.
← All calculatorsBUSINESS STRUCTURE CALCULATOR
Limited company vs sole trader
Compare the estimated amount you could keep under the two most common UK business structures.
Your result
See what your calculator result means
Complete the calculator above and this section will explain the difference in plain English.
No calculation yet
Why business structure matters
Your structure can affect tax, personal risk, funding, admin and what happens later.
Risk & liability
A company can create more legal separation from you personally.
Setup & compliance
A sole trader is simpler, while a company has more filing requirements.
Growth & funding
A company can make external investment easier to structure.
Pensions
Both structures can support retirement planning in different ways.
Exit & succession
Ownership and business continuity can work differently over time.
Explore the key differences
Select a topic to compare a sole trader and limited company.
Tax & take-home
Compare how profits are taxed and how money is taken out of the business.
Sole trader
- Business profits are taxed on you personally.
- Income Tax and self-employed National Insurance can apply.
- You can take drawings without a separate dividend process.
- Simple extraction, but less flexibility around timing and method.
Limited company
- The company pays Corporation Tax on taxable profits.
- You can take money through salary, dividends or other permitted methods.
- There may be more flexibility in how profits are extracted.
- The overall tax result depends on profit level and how money is taken out.
Experlu packages
Get the right support for your next step
Fixed-price services and ongoing support from UK-based accountants.
Company accounts & CT600
From £349 + VAT
Year-end accounts and corporation tax filing.
- Annual accounts
- Corporation Tax return
- Micro and small company support
Self Assessment
£119 fixed
File your sole trader tax return with confidence.
- Tax return preparation
- HMRC filing support
- Fixed-price option
Bookkeeping catch-up
£99 + VAT
Bring your records up to date and get ready for filing.
- Catch-up bookkeeping
- Clean records
- Ready for year-end
Ongoing accounting support
From £99/mo + VAT
Bookkeeping, VAT, payroll and year-round support for your business.
- Monthly bookkeeping
- VAT and payroll support
- A dedicated accountant
Thinking of changing from sole trader to a limited company?
A simple overview of the usual process.
- 1
Review the difference
Compare tax, admin, risk and your future plans.
- 2
Incorporate
Register the company and decide how ownership will work.
- 3
Move what is needed
Review contracts, assets, banking and registrations.
- 4
Start company accounting
Keep company records and meet the new filing duties.
Useful guides
Go deeper on structure, tax and the practical steps involved.
Frequently asked questions
Is a limited company always cheaper for tax?
No. The answer depends on profit, other income, how much money you need to take out, pension planning and other factors. Tax should also be considered alongside admin, liability and your plans for the business.
Can I change from a sole trader to a limited company later?
Yes. Many businesses start as sole traders and incorporate later. The change needs to be planned carefully because contracts, assets, tax registrations, banking and accounting may need to move to the new company.
Do I need an accountant as a sole trader?
Not always. You can keep your own records and file your own return. An accountant can still help if your affairs are more complex, you want tax advice or you prefer someone else to handle the filing.
Which structure is better for getting a mortgage?
Mortgage lenders can assess sole traders and company directors differently. The right structure should not be chosen for a mortgage alone. Speak to a mortgage adviser about how a lender may assess your income.
How are business losses treated for a sole trader vs limited company?
The rules are different. Sole trader losses may sometimes be relieved against other personal income, subject to conditions. Company losses remain with the company and are relieved under Corporation Tax rules.
What about pensions? Is one structure better?
Both can support pension saving. A sole trader usually contributes personally. A limited company may be able to make employer pension contributions. The tax treatment depends on the circumstances and pension rules.
Still not sure?Speak to a UK-based accountant about your situation and goals.
Speak to an expert