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Sole Trader vs Limited Company
Find out which business structure suits you best — and how much it matters for your tax bill.
Your situation
£
Tax comparison at £50,000 profit
Recommendation
👤 Sole trader is likely the right choice
At £50,000 profit, the tax difference is relatively small (£408). Consider whether the extra admin of a limited company is worth it at this stage.
This is a simplified illustration. Speak to an accountant for advice tailored to your situation.
| Sole Trader | Limited Company | |
|---|---|---|
| Setup cost | Free | ~£50 (Companies House) |
| Annual filing | Self Assessment only | Accounts + Confirmation Statement + CT600 |
| Tax on profits | £11,034 | £10,626 |
| Take-home pay | £38,966 | £39,374 |
| Personal liability | Unlimited | Limited to share capital |
| Admin burden | Low | Higher |
| Raising investment | Difficult | Easier (issue shares) |
| Credibility | Personal name | Company name |
Sole Trader breakdown
Income tax£7,486
NI Class 2£179
NI Class 4£3,369
Total tax£11,034
Take-home£38,966
Limited Co breakdown
Corporation tax£7,771
Income tax on salary£0
Dividend tax£2,855
Total tax£10,626
Take-home£39,374
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