Is It Time to Switch to a Limited Company?

If your business is growing, you may be wondering whether it is time to set up a limited company. It is a common question and completely understandable. The idea of forming a company can feel like a big step with new rules and paperwork. The good news is that, with the right support, becoming a limited company can actually make your business simpler, give you more control, and help you plan for the future.

The Truth

1. Going Limited Can Simplify Your Business

Running a limited company separates you from your business. This means your personal finances are protected, and you have more control over how you take money out of the business. You can pay yourself a combination of salary and dividends, leave profits in the company for growth, and plan your company's year-end to suit your cash flow.

With expert guidance, running a limited company is straightforward. You do not need to worry about complicated rules or paperwork because we support you every step of the way.

2. MTD for ITSA Is Coming

Making Tax Digital (MTD) for Income Tax Self Assessment will gradually affect self-employed individuals and landlords:

• From April 2026: gross income over £50,000

• From April 2027: income between £30,000 and £50,000

• From April 2028: income over £20,000

Under MTD, eligible taxpayers submit quarterly updates of income and expenses and a final end-of-year declaration. This gives HMRC a clearer picture of your earnings, but does not replace the need for accurate accounting. The more frequent reporting may increase your costs and administrative work, potentially to a level similar to running a limited company. MTD is a new system, so it requires approved accounting software and careful record-keeping, which can add complexity compared with traditional self-assessment.

If you switch to a limited company, you would instead follow limited company reporting requirements, which many clients may find more straightforward and predictable, because accountants are well-practised with Corporation Tax filings, year-end accounts, and payroll management.

You can see the full MTD timeline and guidance in our resources.

3. Limited Companies Can Be More Tax Efficient

Limited companies allow you to take money as a combination of salary and dividends, which can reduce National Insurance contributions and overall tax compared with being self-employed.

Even small tax savings add up over time, especially if your profits are increasing. A limited company also gives you flexibility to plan for the future, protect your income, and support growth.

Should You Switch to a Limited Company?

Becoming a limited company is not as daunting as it may seem. It can provide simplicity, protection, tax efficiency, and planning options that self-employment alone cannot. Whether you are preparing for MTD, looking to manage your tax efficiently, or planning for growth, a limited company could be the right choice for you.

For more guidance, download our full resource, Is It Time to Go Limited?

We guide small business owners through the switch to limited, making the process simple and clear. Our packages are tailored to your business size and spread the cost with a monthly fixed fee. See our Small Business Packages and Pricing, or Book a discovery call to discuss your business and see how becoming a limited company could help you plan for the future with confidence.