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Sole trader or company? in
What each costs you in tax, what each costs to run, and the one question that usually decides it: will you keep money in the business?
A UK sole trader pays income tax and Class 4 National Insurance on all the profit. A company pays Corporation Tax — 19% up to £50,000 of profit — and the owner pays dividend tax on what they take out.
Unlike Jersey’s, a UK company pays tax on profit it keeps. What decides it is how much you take out, how much you keep, and the extra work of running a company.
- 3 Before you apply · 100%
- 2 You · 67%
- 1 Done for you · 33%
As a sole traderYouHMRC
Register for Self Assessment once you earn more than £1,000 in a tax year — it is free — and file a return each year. Income tax is 20%, 40% and 45% above the £12,570 personal allowance (Scotland’s rates differ), plus Class 4 National Insurance: 6% on profits from £12,570 to £50,270, 2% above.
As a companyYouHMRC and Companies House
Corporation Tax is 19% on profits up to £50,000, 25% above £250,000, with marginal relief between. Dividends above the £500 allowance are taxed at 10.75%, 35.75% or 39.35% from April 2026 — at the UK’s rates even in Scotland. A company protects your own savings and home from its debts in most cases.
Where you live in the UKDone for you
Wales and Northern Ireland pay the same income tax rates as England. Scotland sets its own — six bands from 19% to 48% in 2026 to 2027 — on earnings, so on a sole trader’s profit, but not on dividends.
Keep going
- Work for yourselfTrade as yourself, without a company: what you register, and what you are exempt from.Open
- Choose a registered officeThe official address every company must have: where it can be, whose permission it needs, and where it must be shown.Open
- Get a business licenceWho needs one in Jersey, who is exempt, how long it takes — and the three things it sets going.Open
- All of it, in orderPlan my start draws every journey you need, for your place, with your costs.Plan my start
Words in this journey:Sole traderLimited company