“Limited companies aren’t worth it anymore.”

I hear this weekly. It’s usually followed by:

• A TikTok tax tip
• A WhatsApp accountant
• Or advice that hasn’t been updated since 2017

Yes, taxes have changed.

No, limited companies are not dead.

What’s actually changed?

• Corporation Tax still up to 25%
• Dividend tax rates increased
• Personal allowances frozen
• NIC rules tweaked repeatedly

This has narrowed the gap, not closed it.

The difference now is simple:

Limited companies reward planning, not laziness.

Let’s compare with numbers (£100k profit example)

Assume:

• £100,000 business profit
• Single owner
• No other income

Sole trader position

Approx tax and NIC:

• Income tax
• Class 2 & 4 NIC

Total tax and NIC: ~£33,000–£35,000

Take-home: ~£65,000

Limited company position (basic planning)

• £12,570 salary
• Remaining profit taxed at 19–25%
• Dividends to basic/higher band mix

Total combined tax: ~£28,000–£30,000

Take-home: ~£70,000–£72,000

That’s £5k–£7k difference on the same profit.

Where limited companies really win in 2026

1. Control over timing

You choose:

• When to extract income
• When to leave profits inside the business
• When to trigger personal tax

Sole traders don’t get that choice.

2. Pension planning

Company pension contributions:

• Are deductible for Corporation Tax
• Don’t suffer dividend tax
• Don’t hit personal tax bands

This alone can swing decisions.

3. Risk and separation

Limited companies:

• Ring-fence risk
• Separate personal and business finances
• Are more credible for contracts and funding

This isn’t tax. It’s business architecture.

4. Exit and sale planning

If you ever plan to:

• Sell
• Bring in partners
• Build value beyond “just income”

A limited company is almost always the better vehicle.

The real reason people say “Ltd isn’t worth it”

Because they’re running it like a sole trader inside a company wrapper.

Same behaviour.

More admin.

No planning.

That’s not a tax problem. That’s a strategy problem.

Final thought (for both posts)

Limited companies are no longer a shortcut.

They are a tool.

Used properly, they still win.

Used lazily, they disappoint.

Get in touch and arrange your free call.