Self-Employed
or
Limited Company?
Dear Client,
Are you starting a new business or reviewing your current setup? One of the most important decisions is choosing the right structure:
Should you register as self-employed or form a UK limited company?
Here’s a quick guide to help you decide:
Self-Employed (Sole Trader)
Ideal for: Freelancers, contractors, and small businesses starting out.
✅ Simple and low-cost setup
✅ Minimal paperwork
✅ Full control over profits
❌ Personally liable for debts
❌ Higher tax rates as income grows
2025 Tax Overview:
- Income Tax: 20% / 40% / 45%
- National Insurance: Class 2 & 4 (up to 6%)
Limited Company
Ideal for: Businesses with profits over £40,000 or planning to grow.
✅ Personal asset protection
✅ Tax-efficient (Corporation Tax 19%–25%)
✅ Flexible income options (salary + dividends)
✅ Professional image
❌ More admin and legal duties
2025 Tax Overview:
- Corporation Tax: 19%–25%
- Dividend Tax: 8.75% / 33.75% / 39.35%
- PAYE & Employer NI on salaries
When Should You Incorporate?
You may benefit from switching to a limited company if:
- Your profits exceed £40,000
- You want to reinvest or grow your business
- You need liability protection
- You want to split income with family
- You’re planning pension contributions
Need Personalised Advice?
At Macara Accountants Ltd, we help you choose the best structure for your goals, optimise your tax position, and stay compliant.
Book a free consultation today
✉️ ezzat@macara.co.uk | 📞 07747 494949
Kind regards,
Ezzat Melek (BA, CMA, FCCA)
e: ezzat@macara.co.uk
t: 07747 494949
w: macara.co.uk