The comparison
The tax gap nobody talks about
Take one number — the value a person’s work generates in a year — and earn it five different ways. The tax the state takes doesn’t depend on the number. It depends on how much security you’re willing to give up to earn it. And it runs exactly backwards.
Everyone knows tax is complicated. Fewer people notice that it is also unfair between people who earn the same amount— not because of what they earn, but because of how. A civil servant, a salaried professional, a freelancer, a one-person limited company and a small employer can all generate the same economic value in a year and hand over wildly different shares of it. The gap isn’t a rounding error. It is the difference between keeping four-fifths of your work and keeping barely half.
Move the slider. Watch the effective rate climb as the safety net disappears.
The value one person’s work generates in a year
£100,000
Same figure, earned five ways. Drag to see the rates move.
Public sector
19.7%
£19,729 to tax
Private employee
27.2%
£27,178 to tax
Self-employed
30.7%
£30,689 to tax
Company owner
34.8%
£34,790 to tax
The system pays a negative risk premium
Effective tax rate against how much security the earner gives up. The safest way to earn is taxed least; the riskiest, most job-creating way is taxed most. The line slopes the wrong way.
At £100,000, the company owner hands over 15.1% more of it than the public sector — for taking on far more risk, not less. Risk scores are editorial and illustrative; the tax rates are computed exactly from 2026/27 rules.
See every layer
Open any archetype to see exactly what comes off, line by line, at £100,000.
Public-sector employee — 19.7% to tax
| Total rewardsalary + employer pension | £100,000 |
| Employer pension (28.97%)unfunded DB scheme — kept, tax-free, and worth a fortune | £22,463 |
| Gross salary | £77,537 |
| Employee pension (7.35%)pre-tax — kept, not paid away | £5,699 |
| Taxable salary | £71,838 |
| Income taxfull personal allowance retained | −£16,167 |
| Employee NIC (8% / 2%) | −£3,561 |
| Total tax & levies from their own pocket | £19,729 |
Near-total job security, a pension guaranteed by the state, sick pay, redundancy protection. Almost nothing at risk.
Private-sector employee — 27.2% to tax
| Total rewardsalary + employer pension | £100,000 |
| Employer pension (6%)funded DC scheme — kept | £5,660 |
| Gross salary | £94,340 |
| Employee pension (5%)pre-tax — kept | £4,717 |
| Taxable salary | £89,623 |
| Income tax | −£23,281 |
| Employee NIC (8% / 2%) | −£3,897 |
| Total tax & levies from their own pocket | £27,178 |
Redundancy is possible, the pension carries market risk — but there is PAYE, statutory protection and no personal capital at stake.
Self-employed sole trader — 30.7% to tax
| Net profit | £100,000 |
| Income taxfull personal allowance at £100k | −£27,432 |
| Class 4 NIC (6% / 2%) | −£3,257 |
| Class 2 NICabolished for 2026/27 — no longer charged | £0 |
| Total tax & levies from their own pocket | £30,689 |
No sick pay, no employer pension, no redundancy, no floor under the income — and personally liable for the debts of the business.
Limited-company owner (solo) — 34.8% to tax
| Company profit | £100,000 |
| Salary (to the allowance)tax-free | £12,570 |
| Employer NIC on own salary15% above £5,000 — the owner pays this | −£1,136 |
| Corporation taxwith marginal relief between £50k and £250k | −£19,118 |
| Dividend tax (10.75% / 35.75%)2026/27 rates, after the £500 allowance | −£14,537 |
| Total tax & levies from their own pocket | £34,790 |
Capital at stake, personal guarantees on the lease and the overdraft, income that stops when they do — and they pay employer NIC on their own salary, because they are the employer too.
And then there’s the one who employs people
The four above are one person earning alone. Put four staff and a leasehold under the same £100,000 and the owner also carries employer NIC on every employee, auto-enrolment pension on every employee, and business rates on the premises — every pound of it a tax that only an employer pays. Total off the same £100,000: £42,032, or 42.0% — more than double the 19.7% the safest earner pays. The more people you employ, the more the system charges you for doing it.
Why it slopes the wrong way
A tax system that wanted more people to take risks — start things, employ people, carry the downside when it goes wrong — would reward the risk-takers with a lighter touch, not a heavier one. The UK does the opposite, and mostly by accident rather than design. Three mechanics do the work:
- The employer’s taxes are invisible to employees and unavoidable to owners. Employer National Insurance is 15% on top of most salaries. An employee never sees it — someone else remits it. A company owner is both the employer and the employee, so they pay it on their own salary and on every member of staff. It is the single biggest reason the owner’s line sits so high.
- Dividends are taxed after corporation tax, not instead of it.The profit a company owner draws has already been taxed once inside the company before dividend tax touches it. Two layers, stacked — which is why “dividends are lightly taxed” stopped being true years ago.
- The safest jobs come with the most valuable untaxed reward of all: a guaranteed pension. A public-sector defined-benefit pension can be worth more than a quarter of total pay, arrives tax-free, and carries no market risk. It is real compensation that simply never appears in a tax table.
None of this is hidden. It is all in HMRC’s own manuals. It is just never laid side by side, because no single person is ever taxed all five ways at once — so nobody is ever handed the comparison.
How these figures are calculated
Every rate and threshold comes from the 2026/27tax year (England, Wales & Northern Ireland), the same figures that drive the rest of Kept, verified against GOV.UK. The arithmetic is pinned by hand-computed tests.
The base is the value one person’s work generates: an employee’s total reward (salary plus employer pension), a sole trader’s net profit, or a company owner’s company profit. We count every tax and compulsory levy that falls on that base from the earner’s own side of the fence — which is why employer National Insurance counts for the owner (who pays it) but not for the employee (whose employer pays it). That asymmetry is the point, not a modelling choice.
Public-sector assumptions: Civil Service “alpha” scheme, 28.97% employer and 7.35% employee contribution. Private sector: a typical funded workplace scheme, 6% employer and 5% employee. Company owners draw a £12,570 salary and the rest as dividends, with corporation tax including marginal relief between £50,000 and £250,000. Risk scores are editorial and illustrative — a way to order the archetypes by exposure — not a computed figure. The “job creator” case is a fixed illustration (four staff on £30,000, a £16,000 rateable-value premises) because employer-side levies are fixed amounts that don’t scale with a single slider.
This is the free, general version. Kept does it on your actual numbers.
The calculators here use typical figures. The Kept dashboard rebuilds your real household — income, company, pensions, savings — finds the reliefs the tax code already lets you claim, and forecasts what they keep over 20 years.
See your own positionSources
- Income tax, National Insurance, dividend & corporation tax rates: GOV.UK, 2026/27 tax year.
- Civil Service pension employer contribution rate (alpha), Civil Service Pensions.
- Auto-enrolment and Employment Allowance rules: GOV.UK employer rates and thresholds, 2026/27.