Going limited can cut your tax bill, protect your personal assets and make your business look more credible — but it also adds cost, admin and a public paper trail, and it isn't the right move for everyone. The honest rule of thumb: it tends to pay off once profits are comfortably into higher-rate territory and you value the liability protection, and it tends not to when profits are modest, you need to draw everything you earn, or you simply want the quiet life. Here's the full picture — including the disadvantages the "go limited and save thousands" articles tend to skip.

Tax figures are for 2026/27 and sourced to gov.uk; rates change at each Budget. This is general guidance, not personal advice — your decision depends on your own numbers.

The advantages of going limited

1. Potential tax efficiency (at the right profit level). A company pays 19% Corporation Tax on profits up to £50,000 (gov.uk), and you can take income as dividends, which carry no National Insurance. That can beat a sole trader's Income Tax plus Class 4 NIC — though by less than it used to, because the two main dividend rates rose to 10.75% and 35.75% from April 2026 (gov.uk).

2. Limited liability. The company is a separate legal entity, so — barring personal guarantees or wrongdoing — your personal assets are generally protected if the business runs into debt. For a sole trader, there's no such separation.

3. Credibility and opportunity. Some clients and recruitment agencies prefer (or insist on) working with a limited company. "Ltd" after your name can win work a sole trader can't.

4. Profit retention and planning. You don't have to draw all the profit. Leaving money in the company (taxed at 19%) rather than taking it as higher-rate income gives you flexibility a sole trader doesn't have — useful for smoothing income or building up funds.

5. Pensions and perks. A company can make tax-efficient employer pension contributions and provide certain benefits that are harder to access as a sole trader.

The disadvantages nobody mentions

1. More admin and stricter deadlines. Annual accounts, a Corporation Tax return, a yearly confirmation statement, PAYE if you take a salary, and director duties. Miss a deadline and there are penalties.

2. Higher running costs. Because there's more to do, accountancy fees are higher than for a sole trader — and that cost is what cancels out the tax saving at lower profits.

3. Your information is public. Your company's accounts, registered office and details of directors and people with significant control appear on the Companies House register, which anyone can search.

4. Money isn't freely yours. Company money belongs to the company. Taking it out incorrectly — for example, an overdrawn director's loan — can create unexpected tax charges.

5. IR35 (for contractors). If you contract through your own company, the off-payroll working rules (IR35) can apply and change how you're taxed — a real consideration before switching.

Here's the trade-off at a glance:

	Sole trader	Limited company
Tax efficiency at higher profit	Lower	Usually higher
Liability	Personal	Limited
Admin & cost	Low	Higher
Privacy	Private	Public record
Credibility	Good	Often stronger

When going limited is usually NOT worth it

Be honest with yourself if most of these apply:

• Profits are modest (broadly under ~£30,000) and likely to stay there.
• You need every penny of profit to live on, so you can't benefit from retaining funds.
• You want simplicity and minimal admin.
• The work is a side project or short-term and may not continue.

In those cases the extra cost and effort often outweigh the benefit, and staying a sole trader leaves you better off. For the numbers behind the tipping point, see our guide on sole trader vs limited company.

Making the call

"Should I go limited?" comes down to three things: your profit level, how much of it you need to take out, and how much you value liability protection and credibility against the extra cost and admin. If the first two point upward and you'd sleep better with the protection, it's probably time. If not, there's no shame in staying simple. Go Limited helps you weigh it up honestly and connects you with a partner accountant to confirm the maths on your figures before you decide. See our accountancy page for how that works.

Frequently asked questions

Is it worth going limited? It's usually worth it once profits are comfortably into higher-rate territory (broadly above ~£40,000–£50,000) and you value the limited liability — especially if you can leave some profit in the company. Below that, the extra cost and admin often outweigh the tax saving. The right answer depends on your figures.

What are the main disadvantages of a limited company? More admin and filing, higher accountancy costs, a public record on Companies House, stricter rules on taking money out, and — for contractors — the IR35 off-payroll rules. These are the trade-offs for the tax efficiency and liability protection.

Does going limited save tax? It can, mainly because dividends carry no National Insurance and company profits are taxed at 19% up to £50,000. But the saving is smaller than before April 2026, when dividend rates rose, and running costs reduce the net benefit — so it depends on your profit level and how you take your income.

Can I be a limited company and still pay myself? Yes — directors typically pay themselves a mix of a small salary and dividends. How you split it affects your tax, which is why getting advice on the right combination is worthwhile.

Is my information public if I go limited? Yes. Your company name, registered office, directors, people with significant control and annual accounts are published on the Companies House register and can be searched by anyone.