Expert Advice from Certified Accountants in UK

One of the most important decisions you'll make as a business owner is choosing the right structure — because it directly determines how much tax you pay and how efficiently you grow. At Ency & Line, our certified accountants in the UK and tax advisors in London help clients make this decision with clarity and real financial insight.

Why It Matters More Than You Think

The wrong structure can cost you thousands in unnecessary tax every year. The right one can legally minimise your bill, protect your personal assets, and set your business up for long-term growth. Here's what you need to know.

The 3 Main Structures and How They're Taxed

Sole Trader — Income Tax + Class 2 & 4 NICs

As a sole trader, all profits are treated as personal income. You pay Income Tax above the £12,570 Personal Allowance — 20% at basic rate, 40% at higher rate — plus Class 2 NICs (£3.45/week) and Class 4 NICs (9% on profits between £12,570–£50,270). Simple to set up, but the tax burden rises steeply as profits grow. Our team supports sole traders with Self-Assessment filing and personal tax return preparation, ensuring full compliance and maximum allowable expenses.

Limited Company — Corporation Tax + Dividend Tax on Extraction

A limited company is a separate legal entity. It pays Corporation Tax on profits — 19% up to £50,000, rising to 25% above £250,000. You pay yourself a low salary to minimise NICs, then draw additional income as dividends, taxed at just 8.75% (basic rate). This combination can save a business owner £4,000–£7,000+ annually compared to operating as a sole trader at the same profit level. As trusted accountants and tax advisors in London, Ency & Line provides full support with company incorporation, corporation tax returns, and legitimate tax relief planning.

Partnership / LLP — Profits Taxed Individually

Ideal for multiple founders, a partnership splits profits between partners — each paying Income Tax and NICs individually on their share. An LLP adds limited liability protection on top, making it popular with professional services firms. Our team handles Self-Assessment filing for all partners efficiently and accurately.

A limited company generally becomes more tax-efficient once profits reach £40,000 or more — but your personal tax position, Capital Gains Tax (CGT), Inheritance Tax (IHT) planning, and long-term goals all influence the final decision.