The 2026 dividend tax rises changed this maths for thousands of businesses. Enter your profit and see what each structure really costs this year.
Sole trader
£0
income tax + National Insurance per year
Limited company
£0
all taxes, drawing everything as salary + dividends
Assumptions: 2026/27 rates, England and Northern Ireland. Sole trader pays income tax plus Class 4 National Insurance at 6% on profits between £12,570 and £50,270 and 2% above. Limited company route assumes a £12,570 director salary, employer National Insurance at 15% above £5,000 with no Employment Allowance (single director companies do not qualify), Corporation Tax at 19% to £50,000 and 25% above £250,000 with marginal relief between, and all remaining profit paid out as dividends taxed at 10.75%, 35.75% and 39.35% above the £500 allowance. Excludes pension contributions, student loans and accountancy fees. An illustration, not advice.
The numbers are only half the story: liability protection, lender and client perceptions, pensions and how much you reinvest all matter. We run this properly, on your figures, in a free consultation.