Work out the numbers before you talk to anyone.

For most directors, a low salary of £12,570 (the personal allowance) combined with dividends for the remainder is the most tax-efficient approach. This avoids income tax on the salary, reduces National Insurance and takes advantage of lower dividend tax rates. The optimal split varies based on profit, other income and personal circumstances — the Salary vs Dividends calculator gives figures for your situation.

Tax savings from incorporation typically start to offset the additional accounting costs somewhere between £30,000 and £50,000 of profit, though this depends on how much profit you extract, your other income and your circumstances. The Sole Trader vs Ltd calculator shows the specific saving at your profit level.

On top of gross salary you pay employer National Insurance at 15% on wages above £5,000, and a minimum 3% employer pension contribution. For a £30,000 salary that adds roughly £4,650, bringing the total cost to around £34,650. The PAYE & Staff Cost calculator gives exact figures for any salary or hourly rate.

Making Tax Digital (MTD) is HMRC's programme to move tax records and submissions online using compatible software. MTD for VAT is already mandatory. MTD for Income Tax applies to sole traders and landlords earning above £50,000 from April 2026, and above £30,000 from April 2027.

Sometimes, depending on circumstances. A limited company can be tax-efficient for higher-rate taxpayers reinvesting profits, but it brings additional stamp duty, different and often costlier mortgage products, and more complex accounting. This decision needs careful planning specific to your portfolio and your goals.

Companies with profits between £50,000 and £250,000 pay corporation tax at an effective rate that increases gradually from 19% to 25%. The calculators apply HMRC's exact formula so the figure is right at your profit level.