Should You Incorporate?
The answer isn't just about profit level. Pension access, spouse share-splitting, student loan exposure and how much you want to retain in the business can all flip the decision.
This calculator works out the tax saving, the break-even profit level, and whether incorporating would be worth it for you.
Your Inputs
What this changes
Profit after expenses but before any owner salary, dividend, or pension. The limited company result is director cash plus any profit left in the company after Corporation Tax, because money retained in the company has not yet suffered dividend tax.
What this changes
Sole trader: gross contribution into a personal pension, basic-rate band widens, so income that would have been taxed at 40% drops to 20%. Limited company: employer contribution that reduces taxable profit and Corporation Tax. Either way, the pension money sits in your scheme.
What this changes
A Ltd-only consideration. Employment Allowance cancels up to £10,500 of employer NI, but a single-director company with no other employees is excluded. When eligible, the Ltd route gains because salary above £5,000 doesn't trigger 15% employer NI on the next slice.
What this changes
Only relevant for the limited company route. If your spouse holds ordinary shares, dividends can be paid in their own name and may use their personal allowance and basic-rate band. Sole trader profits belong to one individual for tax.
What this changes
Plans 1, 2, 4 and 5 repay at 9% above the plan threshold. Postgraduate loans repay at 6%. Sole trader income is tested against profit; the limited company route tests salary plus dividends drawn.
What this changes
Optimised tests salary levels up to £50,270 and draw/retain choices, then picks the highest combined personal cash and retained company profit. Full extraction shows what happens if everything available is paid out now.
Rates current for tax year 2026/27
These calculators are diagnostic tools intended to give you an initial estimate. They are not a substitute for personalised advice on your specific circumstances. Figures depend on the inputs you provide and on tax rules that change over time. Speak to us before acting on any result.
A CIMA Chartered Management Accountant will review your details and send you a tailored breakdown.
Excludes around £500 incorporation cost and typical £1-2k/yr additional accountancy. The limited company figure includes retained company profit where selected; the sole trader figure assumes all profit is taxed personally.