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Why use a limited company?

The smart way for UK contractors to structure their earnings

Limited companies are a smart way for contractors to structure their earnings in a more tax-efficient way than self-employment allows. Let’s take a look at why you should use a limited company.

What a limited company could mean for you

  • Limited liability if you're the director
  • Tax-efficient earnings
  • The ability to claim expenses that relate to the business
  • The ability to retain earnings in the company for more tax-efficient distribution

Corporation Tax in the UK rates are lower than personal tax rates and the limited company gives the director flexibility in terms of when and how they draw out their earnings.

It is also important, however, to structure things in a way that maximises tax and operational efficiency.

How to structure your limited company affairs

  • Set your salary at an optimal level – this is fundamental to reducing your tax liability
  • Claim allowable expenses through the company
  • Register for Flat Rate VAT (FRV)
  • Contribute a portion of your income to a Pension
  • Maximise your dividend payments up to the higher rate tax threshold
  • Invest any retained earnings in the company
  • Keep the retained profits in the company for as long as possible

We’ve been advising contractors on the most tax-efficient ways they can use their limited companies since 1995. With our knowledge and experience, you can rest assured that your affairs are in safe hands.


To set up a limited company or get any related advice, simply get in touch with one of our experienced and friendly consultants.

We have some exciting news
for all our 1st Contact clients...

1st Contact is rebranding to Sable International!

For the last 18 months we've been merging with our big brother, Sable International. By the end of the year, we're going to complete the rebrand.

The accountants, brokers, advisors and caseworkers that you are used to dealing with will not be going anywhere as the entire 1st Contact team will be in the same roles at Sable International. You'll still get that same great service, just under a new name.

We'll be keeping you in the loop as we prepare for the next exciting phase in this rebranding.

If you have any questions, please feel free to contact us directly.

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