Sole Trader vs Limited Company — Business Structure
Has the tax advantage of a limited company shrunk?
Spoke 3 — yes, significantly. CT rise + April 2026 dividend rise.
**Yes — significantly.** Two changes did it: - Corporation tax rose from flat 19% to 19-25% (post-2023) - Dividend tax rose 2 points in April 2026 (now 10.75/35.75/39.35%); dividend allowance shrunk from £5,000 a decade ago to £500 On simple full-extraction, sole trader is now often level or ahead at low-middling profits. **Where the company still wins (the extras):** - Profit retention at 19% CT - Employer pension contributions (no NI, CT-deductible) - Spousal dividends (both allowances + bands) - Tax-efficient sale (BADR) The headline "companies pay less tax" is no longer reliably true on simple extraction. The modern case is flexibility, retention, pensions, exit, and liability — not a guaranteed rate saving. **Read the full guide at [rraccountants.uk/tax-advantage-limited-company-shrunk](https://rraccountants.uk/tax-advantage-limited-company-shrunk).**
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