Sole Trader vs Limited Company — Business Structure
Sole trader vs limited company — which saves you tax in 2026/27?
Pillar guide to UK business structure 2026/27 — Ltd tax case has narrowed.
A sole trader pays Income Tax (20/40/45%) and Class 4 NI (6%) on all profit, whether or not they take it out. A limited company pays Corporation Tax (19% to £50k, rising to 25% above £250k), then dividend tax (10.75/35.75/39.35%) on extraction above the £500 allowance. Incorporating used to mean a clear tax saving, but CT rises and the April 2026 dividend tax increase have narrowed the gap: as a rough guide, below ~£30-50k profit a sole trader is usually better, ~£50-70k is break-even, ~£80k+ a Ltd starts to pay — especially with profit retention, pensions, or spousal dividends. **Read the full pillar at [rraccountants.uk/sole-trader-vs-limited](https://rraccountants.uk/sole-trader-vs-limited).**
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