Ltd Company vs Sole Trader: Which Is Right for You?

Starting a Business · 8 min read · Updated 2026-03-20

Compare the tax advantages, liability protection, and costs of operating as a limited company versus a sole trader to find the best structure for your business.

Written by Krishna, Founder & HMRC-registered tax agent at TaxRoot.

Is a limited company always more tax-efficient than a sole trader?

Not always. At lower profit levels (below roughly £30,000 per year), the additional accounting and administrative costs of running a limited company can outweigh the tax savings. The tax efficiency depends on how much profit you generate, how much you need to extract from the business, and your personal circumstances.…

Related TaxRoot services

• Self Assessment tax return — £134 flat fee
• Corporation Tax + annual accounts — from £389/yr
• Making Tax Digital for Income Tax — £34/month
• VAT returns — from £39/month
• UK Limited Company Registration — £100

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