Self-Employed vs Limited Company
Compare running as a sole trader versus operating through a Limited Company.
Limited Company saves £104/year
Self-Employed
Limited CompanyBetter
Frequently Asked Questions
When should I consider incorporating?
Generally, a Limited Company becomes more tax-efficient when profits exceed £40,000-50,000. However, factors like IR35, admin costs (accountancy ~£1,500/year), and the need for funds personally should also be considered.
What are the advantages of being self-employed?
Simpler admin and accounting, no company filing requirements, easier to close down, direct access to profits, and lower accountancy costs. Losses can be offset against other income more easily.
What NI do self-employed people pay?
Self-employed pay Class 2 NI (£179.40/year if profits over £6,725) and Class 4 NI (6% on profits between £12,570-£50,270, plus 2% above £50,270). No employer NI is payable.
Can I switch from self-employed to limited company?
Yes, you can incorporate at any time. You'll need to register a company, open a business bank account, and inform HMRC and your clients. Consider timing around the tax year end for simplicity.