Limited Company Advantages

With the tax burden getting heavier by the year, we had a look around to see if we could find some legal ways to reduce our tax bills.

The one option that continued to appear in our searches is to contract through a limited company.

If you’re in a position to contract, or if you’re between jobs, it might be worth considering the limited company route. Contracting through a limited company has some significant advantages over permanent employment. They include:

  • Ability to deduct expenses like travel costs
  • More control over how you structure your income, reducing your tax bill in the process
  • Ability to retain income, further reducing tax bills for high earners
  • The ability to register your limited company for the flat rate VAT scheme

So how does it work? The short answer is you basically turn yourself into a small business, of which you’re the director and only employee. You can then get all the advantages of a normal business, like business expense deductions. You can also structure your own pay by paying yourself dividends, which gets taxed at a much lower rate in the UK.

Sounds complicated? It is, but there are lots of accountants that can help you with the finer details. One of our personal favourites is EasyLimited. They have an easy to use calculator on their website that will give you the exact tax percentage you’ll pay if you contract through a limited company.

Have a look at their website and blog, where you’ll find a lot more information about the advantages of contracting through a limited company, as well as the disadvantages. They also have detailed information about the flat rate VAT scheme, and what expenses you’ll be able to deduct when you contract through a limited company.


About Us is a Free information service regarding all your tax needs. Our services include:
1. A News Forum, to keep you up to date with any new developments in the UK tax arena.
2. An Advanced Tax Calculator, to provide you with a way to accurately calculate how much tax you should be paying.
3. Ground Breaking online tool to help you quickly and easily claim a tax refund from HMRC.

We take care of all the complexities of claiming your tax refund, while leaving you in total control of your money. No agent needed!

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