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For builders, plumbers, electricians and other trades · 2026/27
The short answer
If you take all the profit out, staying a sole trader usually leaves you slightly better off in 2026/27. At £100,000 profit, a sole trader keeps £69,311 and a limited company director £65,210. A company pays off when you leave profit in the business, or need limited liability or a company to win contracts.
Calculator
Enter your yearly profit to compare take-home pay. For the company, we test the two usual director salaries and use whichever leaves you more.
Sole trader take-home
£40,268
Limited company take-home
£38,139
Salary £12,570 + dividends £28,589
A sole trader leaves you about £2,129 a year better off.
| 2026/27 | Sole trader | Limited company |
|---|---|---|
| Profit | £50,000 | £49,000 |
| Corporation Tax | – | £6,706 |
| Employer National Insurance | – | £1,136 |
| Your National Insurance | £2,246 | £0 |
| Income Tax (incl. dividend tax) | £7,486 | £3,020 |
Estimate only, not tax advice. Uses 2026/27 rates for England, Wales and Northern Ireland, assumes all company profit is paid out as dividends, and ignores pensions, student loans and other income. Profit shown for the company is after the extra costs you entered.
Worked examples
All profit taken out; no extra accountancy costs added for the company.
| Profit | Sole trader keeps | Limited company keeps | Difference |
|---|---|---|---|
| £30,000 | £25,468 | £24,403 | Sole trader +£1,065 |
| £50,000 | £40,268 | £38,862 | Sole trader +£1,406 |
| £80,000 | £57,711 | £55,765 | Sole trader +£1,947 |
| £100,000 | £69,311 | £65,210 | Sole trader +£4,102 |
| £150,000 | £92,040 | £85,321 | Sole trader +£6,719 |
When a company pays off
CIS
On construction work, contractors deduct 20% from payments for your labour under the Construction Industry Scheme (30% if you aren't registered).
As a sole trader you get it back through Self Assessment, often months later. A limited company can set CIS deductions against the PAYE and National Insurance it owes each month, which is easier on cash flow. With gross payment status nothing is deducted at all. Work out yours with our CIS calculator.
330,436 home-improvement businesses in the UK trade as limited companies (Companies House, September 2026). See which trades are growing fastest and what each trade earns.
At a glance
| Sole trader | Limited company | |
|---|---|---|
| Tax on profit | Income Tax 20–45% plus Class 4 NI 6%/2% | Corporation Tax 19–25%, then tax on salary and dividends you take |
| Liability | You are personally liable for business debts | Usually limited to the company, unless you give personal guarantees |
| Admin | Register with HMRC, one Self Assessment return | Companies House accounts and confirmation statement, Corporation Tax return, payroll |
| CIS deductions | Reclaimed through Self Assessment | Offset against monthly PAYE and NI |
| Privacy | Business details stay private | Name, directors and accounts are public on Companies House |
| Closing down | Simply stop trading and tell HMRC | Strike off or liquidate the company (how strike-off works) |
General information using 2026/27 rates for England, Wales and Northern Ireland, not tax advice. Scottish Income Tax bands differ. Speak to an accountant before changing how you trade.