Becoming a Limited company

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    At the moment I am a sole trader. I have been advised by my accountant to stay this way until I would need to charge VAT, and then become a limited company. Do you agree?

    Jonathan Lea

    That’s probably right. Other than limited liability, the main advantage of running your business as a limited company is that you are (or used to be) likely to pay less personal tax than a sole trader.

    However, the government in 2016 increased the rate of tax on dividends, as well as cut the dividend allowance, so my understanding is that for most freelancers there is no real advantage from a tax perspective any more in trading through a limited company.

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