Structure
Should I go Ltd or sole trader as a PT?
The honest answer
When each structure wins
Two simple rules: Ltd is for tax efficiency at higher profits, sole trader is for simplicity.
Sole trader · Year 1–2 of trading
Register in 10 minutes. No company accounts. File one annual Self Assessment. Pay tax on your profit. This is right for ~80% of UK PTs.
Sole trader · Profit under £30k
The combined Income Tax + NIC bill is roughly the same as Ltd corporation tax + dividend tax at this level. The £400–£600 accountant fee tips it firmly toward sole trader.
Limited Company · Profit £40k+
Pay a small salary (£12,570) + dividends. Corporation tax is 19% (or 25% above £50k profits). You take less out personally and reinvest the rest. Saves £2k–£5k/year typically.
Limited Company · Multiple revenue streams
Online programmes, group classes, retreats, supplements. A Ltd lets you ringfence those incomes, employ helpers properly, and stay below VAT thresholds with cleaner separation.
Trade-offs
What you actually give up by going Ltd
The tax saving is real. The admin cost is also real. Both should be weighed before you incorporate.
Public records
Your name, address, accounts and shareholding are all public on Companies House. Sole traders are anonymous.
PAYE every month
Even if you’re the only employee, you run a monthly payroll for your salary. Most accountants include this in the package.
Money isn’t yours
Cash in the company bank account belongs to the company, not you. Taking it out incorrectly is a director’s loan or an illegal dividend — both have penalties.
Mortgages get harder
Lenders sometimes only count salary + declared dividends — not retained company profit. Talk to a broker before incorporating if you’re buying within 2 years.
FAQ
Quick answers
What's the actual income point where Ltd beats sole trader?
Roughly £30,000–£40,000 of profit per year (after expenses). Below that the corporation tax + accountant cost outweighs the saving. From £45k–£60k profit a Ltd usually saves £2k–£5k/year. Above £60k the gap widens fast.
How much extra admin is a Limited Company?
Annual confirmation statement (£34, 30 mins), annual accounts and corporation tax return (most PTs pay an accountant £400–£600/year for both), and you pay yourself via PAYE which adds a monthly run. Realistic extra time: 4–6 hours/year on top of an accountant's work.
Do I need to be VAT-registered for a Ltd?
No — VAT is triggered by turnover (£90k threshold in 2026), not by company structure. Many sole traders are VAT-registered; many Ltds aren't. They’re separate decisions.
Can I switch from sole trader to Ltd later?
Yes, and most PTs do. You incorporate (£12 at Companies House), tell HMRC you’ve stopped trading as a sole trader, and start invoicing through the new company. Existing clients sign new contracts with the Ltd — usually a 1-paragraph email.
What's IR35 and does it affect PTs?
IR35 catches contractors who would be employees if they didn't operate through a Ltd. Standard 1:1 PT work — multiple clients, your own kit, your own hours — sits firmly outside IR35. It only becomes a worry if you have one big corporate client paying you like a salaried coach.