2026/27 edition · Updated 15 October 2026 · For England, Wales and Northern Ireland
What's inside
- The 2026/27 rates that matter for both structures, side by side.
- What you'd keep at £30,000, £45,000, £60,000, £80,000 and £100,000 profit.
- What happens if you leave profit in the company, with a worked example.
- When a company still makes sense, and what running one involves.
- A 10-question worksheet and space to note your own numbers.
The key points in brief
Going limited used to be standard advice once profits passed about £30,000. Two changes have altered that: employer National Insurance rose to 15% from April 2025, and dividend tax rose by 2 percentage points from April 2026.
| Profit | Sole trader keeps | Company owner keeps |
|---|---|---|
| £30,000 | £25,468 | £23,536 |
| £60,000 | £46,111 | £45,224 |
| £100,000 | £69,311 | £64,643 |
Assumes all profit is taken out, a salary of up to £12,570 plus dividends, and £1,200 a year of extra company running costs.
A company can still win when you don't need all the profit. With £80,000 profit, a company owner who stays a basic rate taxpayer pays about £2,450 less tax this year and leaves £13,894 in the company. The workbook explains the catch, and the other reasons people choose a company.
Try your own figures in our free calculator, or read the online guide: sole trader or limited company?
Common questions
Is it better to be a sole trader or a limited company in 2026/27?
If you take all the profit out every year, a sole trader keeps more at every profit level from £30,000 to £100,000 in our 2026/27 examples, because of higher dividend tax and employer National Insurance. A company can still save tax when you leave some profit in the business, pay into a pension, or need limited liability.
What are the dividend tax rates for 2026/27?
From 6 April 2026, the first £500 of dividends is tax-free. After that, dividends are taxed at 10.75% for basic rate taxpayers, 35.75% for higher rate taxpayers and 39.35% for additional rate taxpayers.
How much corporation tax does a small company pay?
Companies pay 19% on profits up to £50,000 and 25% on profits over £250,000. Between those, marginal relief gives a rate in between.
What extra admin does a limited company involve?
Annual accounts to Companies House, a corporation tax return, a yearly confirmation statement, payroll if you pay a salary, and your own self assessment return for dividends.