I’m a sole trader and business is going well, is it worth me becoming a limited company?

This is a question we get asked all the time and in most instances incorporating a limited company is a tax efficient option.


A sole trader with profits of £25,000 in 2018/19 will only save approximately £700 in Tax and NI by incorporating – assuming they are extracting all of the profits in the most efficient way possible. However the additional cost of compliance, company accounts etc. would probably wipe out the saving at this level.


Once profits get to the £50,000 mark, the tax savings are more significant at approximately £2,000, making incorporation more attractive. The savings continue to increase at profits above this level, but not indefinitely.


At profits of £70,000, the tax saving is £2,380 but above this, the savings contract.


Where the profits are in excess of £145,000 it is now actually more tax efficient to be a sole trader!  But remember that saving tax isn’t the only reason to incorporate a limited company…


Incorporating a company has other benefits including the protection of assets owned personally, the ability to contribute into a pension scheme & relevant life cover as well as the option to split income with others.

The downside is that you have more compliance responsibility and it becomes vitally important to maintain good accounting records (with our help of course).

Free Consultation

It is important to remember that there’s no longer one size fits all so what’s right for someone else may not be right for you.

Call today and book a free meeting with one of our lovely team to discuss whether this is a beneficial option for you.

01737 652 852