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Have you ever wondered about making a move to Limited company status from Self employed? do you know that it might be more beneficial for you.

At Daniel Consultancy we can form your limited company the same day and help to set up your Bank Account, register your business for PAYE and VAT.

Once you take us on Board as your Professionally qualified accountant we will then advise you on the most tax efficient way of working through your limited company.

Moving from Self – employed to Limited

If you are contemplating on the choice of trading perhaps to a Limited company, then consider the following points:

  • Will your expected earning to be £25000 or more in the coming tax year?
  • Will you have considerable expenses? Limited company can claim wide range expenses that are not allowed under sole trader
  • Will your business cope with unforeseen Business risk ? A self employed person will be personally liable if the business does not succeed whereas in a Limited company the company is a separate legal entity from the Directors and Shareholders and therefore directors nor shareholders will not be affected.

The Advantages and disadvantages

Although there are many benefits to working your own limited company rather than working as self employed, as with most things, there are pros and cons to consider to weigh both options.

Administrative work

If you operate through self employed basis, there is hardly any admin work all: you only have to submit tax return once a year. Whereas, in a Limited Company there will be some administrative work involving every month. On Average you could be spending 30 minutes of your time each day. The administrative cost is tax deductible expense.

Self Employed and Limited Company Tax Return

As a self employed individual whose business and personal tax affairs are regarded as one unit, literally means an individual is not indistinguishable from his/her business in the eyes of HMRC, it means that your business profits will be classed as personal income, you will be required to pay tax as well as pay class 2 and 4 national insurance contributions. Overall, you could be worse off from our experience of working with clients.

As a limited company you pay tax on your profits chargeable to Corporation tax which is taxed at rate of 19% provided profit is under £300,000.

In order to utilise the available tax benefits, you can elect to pay yourself a modest salary this will reduce your PAYE tax liability and your national insurance contributions, and you can yourself additional amount as dividend.

The Flat Rate VAT Scheme

The Flat Rate scheme is available to both self employed and limited companies. It allows you to charge 20% on your invoices, but pay back HMRC at lower depending on trade or profession. There are rules on how to use them and account for them.


There are exhaustive list of expenses that can be claimed. Self employed basis there is restriction to the type of expenses you can claim, wholly and exclusively criteria condition must be met. As for Limited company there is a wide range expenses claimed which will reduce the corporation tax liability. Please get in touch with us discuss more about it.