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Compare estimated annual personal cash as a sole trader or through a limited company using 2026/27 assumptions.
Estimated annual personal cash
2026/27 · Same business profit and other income under each structure
Sole trader is higher in this model
−£2,195
Difference in estimated personal cash; employer pension is shown separately.
Employer pension is shown separately from spendable cash. Results are an estimate under the assumptions below.
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Personal cash, combined tax/payroll charges and employer pension value are shown separately; pension is not cash.
| Measure | Sole trader | Limited company |
|---|---|---|
| Estimated personal cash after tax | £39,972.20 | £37,777.56 |
| Income Tax (including dividend tax) | £7,406.00 | £2,975.98 |
| National Insurance (employee / Class 4) | £2,221.80 | £0.00 |
| Employer National Insurance | £0.00 | £1,135.50 |
| Corporation Tax | £0.00 | £6,610.96 |
| Employer pension value (not cash) | £0.00 | £0.00 |
A funding allocation of the modelled company profit; all remaining post-tax profit is assumed distributed.
| Use of business profit | Amount |
|---|---|
| Business profit before costs | £50,000.00 |
| Admin costs | £1,500.00 |
| Director salary | £12,570.00 |
| Employer NI | £1,135.50 |
| Employer pension | £0.00 |
| Corporation Tax | £6,610.96 |
| Distributed dividends | £28,183.54 |
The same cost, salary, pension, region and distribution assumptions are recalculated at each profit point; this is a static sensitivity, not a forecast.
| Business profit | Sole trader cash | Limited-company cash |
|---|---|---|
| £10,000.00 | £9,600.00 | £8,043.48 |
| £25,000.00 | £21,472.20 | £19,704.43 |
| £40,000.00 | £32,572.20 | £30,548.31 |
| £50,000.00 · Current | £39,972.20 | £37,777.56 |
| £75,000.00 | £54,579.40 | £52,695.33 |
| £100,000.00 | £69,079.40 | £64,501.27 |
| £150,000.00 | £91,828.40 | £86,573.74 |
This illustration compares estimated personal cash from the same business profit as a sole trader and through a one-director limited company. It is not a recommendation about incorporation.
The model estimates Income Tax, dividend tax, Class 4 National Insurance, employee and employer National Insurance, Corporation Tax, salary, dividends and employer pension contributions for rUK or Scotland. It assumes qualifying employer pension costs are deductible and that post-tax company profit is available and distributed as dividends. Pension value is separate from personal cash.
It excludes savings income, Employment Allowance, student-loan repayments, voluntary Class 2 payments, National Insurance on other employment, loss relief and carry-forward, associated companies, short accounting periods, benefits, other reliefs and IR35. Taxable profits are floored at zero, and the tool does not check statutory distributable reserves. Confirm your position and current rules with HMRC or a qualified adviser.
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These GOV.UK and Scottish Government sources support the tax-year rates, National Insurance and company-tax explanations on this page. Some linked topics appear in the FAQs but are not inputs to the estimate.