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Sole Trader vs Ltd
Compare the total tax you would pay as a sole trader versus incorporating as a limited company and paying yourself a salary plus dividends.
Your Numbers
You save by choosing Ltd£902per yearLtd becomes cheaper at around £55,000 profit
Sole Trader
Take Home
£45,929
Income Tax£11,432
NI Class 2£182
NI Class 4£2,457
Total Tax£14,071
Effective Rate23.5%
Limited Company
WinnerTake Home
£46,831
Salary£12,570
Dividends£37,499
Corporation Tax£8,796
Employer NI£1,136
Income Tax (salary)£0
Employee NI£0
Dividend Tax£3,237
Total Tax£13,169
Effective Rate21.9%
Side-by-Side Breakdown
| Sole Trader | Ltd Company | |
|---|---|---|
| Business Profit | £60,000 | £60,000 |
| Salary Drawn | N/A | £12,570 |
| Dividends Drawn | N/A | £37,499 |
| Corporation Tax | £0 | £8,796 |
| Employer NI | £0 | £1,136 |
| Income Tax | £11,432 | £0 |
| Employee NI | £0 | £0 |
| NI Class 2 | £182 | £0 |
| NI Class 4 | £2,457 | £0 |
| Dividend Tax | £0 | £3,237 |
| Total Tax | £14,071 | £13,169 |
| Take Home | £45,929 | £46,831 |
| Effective Rate | 23.5% | 21.9% |