Special offer: Sign up before the end of the tax year (5 April 2025) and receive £50 offer your first tax return
logo

Self-Employed vs. Sole Trader vs. Limited Company: What’s the Difference?

Authors
Self-Employed vs. Sole Trader vs. Limited Company: What’s the Difference?

Self-Employed:

· This is a broad term that means you work for yourself rather than an employer.
· If you earn money from content creation, you are automatically self-employed in the eyes of HMRC.

Sole Trader:

· This is the simplest business structure for self-employed individuals.
· You and your business are legally the same entity, meaning you are personally responsible for any debts.
· You pay Income Tax and National Insurance on your profits through Self-Assessment.
· You must register as self-employed with HMRC if you earn more than £1,000 per year from your content.

Limited Company:

· A separate legal entity from you, offering liability protection for your personal assets.
· Pays Corporation Tax (rather than Income Tax) on profits.
· You can pay yourself through a salary and dividends, which can be more tax-efficient at higher income levels.
· More administration and record-keeping required, including filing annual accounts with Companies House.
· Provides greater privacy compared to being a sole trader, as personal income is not directly linked to your name.

How Do These Structures Affect Your Taxes?

Sole Trader (Self-Employed)


Simple to set up – just register with HMRC. All profits are yours, but you must pay tax on them through Self-Assessment. Liability risk – you are personally responsible for any business debts. Must keep records of income and expenses.

Example: You start an OnlyFans account, and all money earned is considered personal income.

Limited Company


More tax-efficient for higher earnings (due to lower Corporation Tax rates). Personal liability protection – your assets are separate from the business. Greater credibility for brand deals and collaborations. More admin – including registering with Companies House and filing annual accounts.

Example: You set up YourName Ltd., and all income from content creation is paid to your company. You then pay yourself a salary and dividends, reducing your overall tax bill.

Key UK Tax Rates (2024/25 Tax Year)

Income Tax (for Sole Traders & Individuals)
· £0 - £12,570: 0% (Personal Allowance)
· £12,571 - £50,270: 20%
· £50,271 - £125,140: 40%
· £125,141+: 45%

Corporation Tax (for Limited Companies)
· Up to £50,000 profit: 19%
· Over £50,000 profit: 25%

Dividend Tax (if paying yourself through a Limited Company)
· Up to £500: 0% (Dividend Allowance)
· £501 - £50,270: 8.75%
· £50,271 - £125,140: 33.75%
· £125,141+: 39.35%

VAT & Other Considerations

🛡 VAT Registration: If your earnings exceed £90,000 per year, you must register for Value Added Tax (VAT). Some platforms may automatically charge VAT on certain transactions.

🛡 Keeping Records: You must keep track of all earnings from subscriptions, tips, brand deals, collaborations, and any other income sources. HMRC may audit your records, so it’s vital to maintain accurate records.

🛡 PAYE vs. Self-Employed: If you have a traditional job alongside your content creation, your employer will deduct Income Tax & National Insurance through PAYE. However, you must still declare your content income separately.

🛡 National Insurance Contributions (NICs): If self-employed, you may need to pay Class 2 and Class 4 NICs to qualify for State Pension and other benefits. If using SED (Seafarer’s Earnings Deduction) or earning below the threshold, you may need to voluntarily contribute.

Conclusion: Which Tax Structure is Best for You?

✔ If you’re just starting out and earning a small amount, registering as a sole trader is the easiest option.

✔ If you’re earning significant amounts (£50,000+), a Limited Company may offer better tax efficiency and legal protection.

At One & Only Accounts, we specialise in tax advice for content creators. Whether you need help registering as self-employed, setting up a limited company, or filing your tax return, we’re here to help.


Get in touch today for a consultation!

Refer a friend and earn £50

Tell your friends and fellow content creators about us and receive a £50 reward!

Find out more
Refer a friend

If you know somebody who is in need of tax advice, simply refer them to us by email and if they go ahead with using our services, you will receive a £50 referral fee as a thank you from us.

Your details

Your first name
Your last name
Your email

Your friends details

Your friends first name
Your friends last name
Your friends email
Your friends phone number (optional)
Additional information Enter any additional information that may be of use.

Refer a friend terms and Conditions

  • If you wish to refer a friend, please complete the form above including your referral's name and email address/telephone number. Failure to do so may result in the referral fee being withheld.
  • If your referral successfully registers for our services and completes a tax return with us, you will be transferred the £50 referral fee within 14 days of their tax return being filed with HMRC. Your referral must enter your email address in the referral field when signing up.
  • You must be over 18 years of age.
  • The offer is valid for referrals who proceed to use One and Only Accounts only.
  • You and your referral’s personal data will be collected, stored and processed for the purposes of administering and assessing the promotion. For more information on how One and Only Accounts processes personal data, please see our privacy page.
  • One and Only Accounts reserves the right to amend, vary or cancel these terms and conditions or to withdraw this promotion at any time.
  • The promoter of this offer is One and Only Accounts, 101 Northwood Road, Whitstable, Kent CT5 2HE.