Incorporation Calculator

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Incorporation Calculator

Use this calculator to work out if you would be better off by running your business through a Limited Company.

Entries are based on one Partner or Sole Trader

Annual Taxable Profits of Sole Trader or one Partner (£)

Number of partners (enter 1 for sole trader)

Salary to be taken from company (£)
The optimum salary for most small businesses is often to keep the salary below the level at which National Insurance becomes payable.

Optional Entries to get a more accurate result

Private expenses (£)
E.g. fuel, telephone – expenses that are not tax deductible for a Sole Trader or Partnership but are for a Company.

Benefits in kind (£)
Benefits that may arise from having a company (e.g. car and fuel benefit)

Number of Associated Companies
Companies under your control NOT including this one

Scottish Taxpayer?

Results if a Sole Trader or Partner

Profits (£)

Income Tax (£)

Class 4 National Insurance (£)

Class 2 National Insurance (£)

Net Income (£)

Results if a Limited Company

Profits (£)

Salary (£)

Employers NI on salary and benefits (£)

Corporation Tax (£)

Available for Dividend (£)

Income Tax on salary, benefits and dividends (£)

Employees NI (£)

Net Income (£)

Extra Income By Incorporating (£)

Extra savings possible (£)
Extra savings possible by not extracting dividends that put your income above the basic rate tax band..

Total possible savings (£)

It is assumed all partners share equally in the profits, are liable to pay NI and would not be contracted out, have the same tax position and there is no other taxable income or tax deductible allowances apart from the basic personal allowance ( should be below £100k ).

This calculator can only give a guide to potential savings but cannot cater for all situations. You must consult an accountant for specific advice in your own circumstances before taking any action.

There are also may other factors to take into account before deciding to incorporate, although tax savings are often an important consideration.

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