Why staying self-employed is usually right at first
As a sole trader you register once, file one Self Assessment a year, and keep your affairs private and simple. For a freelancer earning a normal freelance income, that simplicity is worth a lot — and on straight profit extraction the tax difference versus a company is now small. Check the numbers on our self-employed vs limited company calculator; you may be surprised how close they are.
When a company genuinely pays
The old "incorporate above £30–40k to save tax" rule has largely gone: after the 2025 rise in employer National Insurance and years of higher dividend tax, a single-director company often nets about the same as — or slightly less than — a sole trader on full extraction. Where a company still wins is structure and planning: limited liability, the ability to retain profit taxed only at corporation-tax rates rather than drawing it all, pension contributions, splitting income with a shareholder spouse, and credibility with some clients.
