UK Sole trader or limited company?

Jan 3, 2023
Reaction score
United Kingdom
Hi, im hoping someone can help me im in a bit of a dilemna. So the scenario is im a self employed tiler, i subcontract through another firm and am paid weekly minus cis tax deductions. I do my tax returns every April and all is relatively straightforward.
The problem is now I’m making a bit over the tax threshold so i keep being told limited company is going to be more tax efficient for me. My worry is paying myself from this company and also is it definitely going to benefit me as the logistic side of it seems a headache compared to what i currently need to do.
The main thing i want to know is in regards to paying myself efficiently and paying all correct taxes. So if we say for example the company (me) is expected to earn 70k this year.. Is the best thing to do pay a small salary under tax allowance approximately £12000, then pay myself dividends few times a year. The problem thats just arose rom this is the company will pay cis tax at source and apparently this can only be reclaimed through monthly payroll and not corporation tax which i was initally thinking would be better ?!
Sorry not even sure if i have explained my questions correctly so will just clarify:

as a soleworker earning 70k ish in construction trade is it better to be limited company or should i stay as self employed sole trader?

will i only be able to claim cis deductions on paye monthly payroll? (Hence making corporation tax more expensive? )

If company earns 70k and i pay myself £12000 paye salary, then say 3 seperate dividend payments of £8000 so total salary taken for year would be £36000, then how much corporation tax am i going to owe? It seems il be gettin taxed twice this route as im taxed at source
Hope some1 can help me see sense of all this



VIP Member
Jan 6, 2013
Reaction score
United Kingdom
If you set up a limited company you pay corporation tax on your taxable profits rather than income tax on your profits as a sole trader. Income tax rates are higher than corporation tax rates and that's why it's usually beneficial for tax purposes to set up a limited company.

There's various ways of taking money out of your limited company but which way is the most tax efficient for you, I can't say.

You're best making an appointment with an accountancy practice for advice on the best way forward for you.

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Members online

No members online now.

Forum statistics

Latest member

Latest Threads