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Your Tax Comparison Results
Tax Efficiency Comparison
Sole Trader
Limited Company
Sole Trader Breakdown
| Taxable Profit | £0.00 |
| Personal Allowance | £12,570.00 |
| Income Tax (Basic Rate) | £0.00 |
| Income Tax (Higher Rate) | £0.00 |
| Income Tax (Additional Rate) | £0.00 |
| Total Income Tax | £0.00 |
| Class 2 NI | £0.00 |
| Class 4 NI | £0.00 |
| Total National Insurance | £0.00 |
| Total Tax & NI | £0.00 |
| Take-Home Amount | £0.00 |
Limited Company Breakdown
| Company Profit (Before Salary) | £0.00 |
| Director's Salary | £0.00 |
| Profit After Salary | £0.00 |
| Corporation Tax | £0.00 |
| Available for Dividends | £0.00 |
| Dividends Taken | £0.00 |
| Income Tax on Salary | £0.00 |
| Income Tax on Dividends | £0.00 |
| National Insurance (Employee) | £0.00 |
| National Insurance (Employer) | £0.00 |
| Total Tax & NI | £0.00 |
| Take-Home Amount | £0.00 |
Year-on-Year Projections
| Year | Business Profit | Sole Trader Take-Home | Limited Company Take-Home | Difference |
|---|
These projections assume:
- An annual growth rate of 5% in business profit
- Consistent expense ratio relative to income
- No changes to the current tax legislation
What These Results Mean
The calculator provides a comparison of tax obligations under both business structures based on the information you've provided.
For sole traders, we've calculated income tax and National Insurance contributions based on your business profit.
For limited companies, we've calculated an optimal extraction strategy considering salary, dividends, corporation tax, and personal tax liabilities.
Note: This is a general estimate. Your actual tax situation may vary based on additional factors.
Key Differences Between Sole Traders and Limited Companies
Sole Traders:
- Simpler setup and administration
- Pay income tax on all business profits
- Pay Class 2 and Class 4 National Insurance
- Unlimited personal liability for business debts
- Less paperwork and lower accounting costs
Limited Companies:
- Separate legal entity from its owners
- Pay corporation tax on company profits
- Can pay salary and dividends to directors/shareholders
- Limited liability protection for personal assets
- More tax planning flexibility but higher administrative burden
Current Tax Rates (2024/25)
| Tax Type | Sole Trader | Limited Company |
|---|---|---|
| Income Tax |
Personal Allowance: £12,570 (0%) Basic Rate: £12,571-£50,270 (20%) Higher Rate: £50,271-£125,140 (40%) Additional Rate: Over £125,140 (45%) |
Salary subject to personal income tax (same bands as sole trader) |
| National Insurance |
Class 2: £3.45 per week Class 4: 6% on profits £12,570-£50,270 Class 4: 2% on profits above £50,270 |
Employee's NI: 8% on salary £12,570-£50,270 Employer's NI: 13.8% on salary above £9,100 No NI on dividends |
| Corporation Tax | Not applicable |
Small Profits Rate: 19% (profits under £50,000) Main Rate: 25% (profits over £250,000) Marginal Relief between £50,000-£250,000 |
| Dividend Tax | Not applicable |
Dividend Allowance: £500 Basic Rate: 8.75% Higher Rate: 33.75% Additional Rate: 39.35% |
Want a Full Tax Assessment?
Our expert accountants at MA & CO can provide personalized advice to maximize your tax efficiency based on your unique business situation.
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Phone
020 8158 8499
020 3890 1933
Address
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What Our Clients Say
"MA & CO Accountants helped me save thousands in taxes by switching from sole trader to limited company at exactly the right time. Their advice was invaluable."
- Sarah T., Small Business Owner
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