A Complete Guide from Jungle Tax – Specialist Accountants for Creatives
As a creative freelancer, you’ve got the talent and drive to build a successful business — but one of the first decisions you’ll face is whether to operate as self-employed or set up a limited company.
This decision isn’t just about structure — it affects how you get paid, how much tax you pay, your personal liability, and even how your business is perceived by clients. Many creative freelancers are confused about which option is best for them — and that’s where Jungle Tax Specialist Accountants for Creatives can help.
At Jungle Tax, we specialise in providing tailored accounting and tax solutions to creative freelancers. In this guide, we’ll walk you through the key differences between self-employment and limited company status, and help you decide which is the best option for your creative business.
🎯 What’s the Difference Between Being Self-Employed and Running a Limited Company?
The key difference is how your business is legally structured and taxed:
✅ Self-Employed (Sole Trader):
● You work under your own name or a business name.
● You and your business are legally the same entity.
● You report your earnings through a Self-Assessment Tax Return.
● You pay Income Tax and National Insurance directly on your profits.
● Your business is a separate legal entity from you.
● You act as a director and shareholder of the company.
● You pay yourself through a combination of salary and dividends.
● The company pays Corporation Tax on its profits, and you pay Income Tax on any salary and dividends.
One of the biggest reasons creative freelancers consider switching to a limited company is the potential tax savings.
| Structure | How It’s Taxed | Tax Rates |
| Self-Employed | Income Tax + National Insurance | 20% – 45% Income Tax + 9%–2% National Insurance |
| Limited Company | Corporation Tax + Dividend Tax | 25% Corporation Tax + 8.75%–39.35% Dividend Tax |
👉 Self-Employed:
● Profits are taxed through Income Tax (20%, 40%, or 45%) + National Insurance (9% on profits up to £50,270 and 2% above that).
● No flexibility in how you take profits.
👉 Limited Company:
● Profits are taxed at 25% Corporation Tax (if profits exceed £50,000).
● You can pay yourself a small salary (up to £12,570 tax-free) and take dividends, which are taxed at lower rates than Income Tax.
● More flexibility in how you distribute profits, reducing overall tax liability.
✅ A limited company is more tax-efficient if you’re earning over £30,000 per year.
✅ If you’re earning below £30,000, staying self-employed may be simpler and more cost-effective.
Running a limited company comes with more admin and regulatory requirements than being self-employed.
👉 Self-Employed:
✅ Simple to set up and manage.
✅ File a Self-Assessment Tax Return once a year.
✅ No need to keep complex company records.
👉 Limited Company:
❌ Must register with Companies House.
❌ Must file annual accounts and a confirmation statement.
❌ More detailed record-keeping and reporting required.
❌ Directors have legal responsibilities under UK company law.
✅ Self-employment is simpler and involves less paperwork.
✅ A limited company comes with more responsibility — but with higher potential financial rewards.
One of the key benefits of a limited company is that it protects you personally from business liabilities.
👉 Self-Employed:
● You and your business are legally the same entity.
● If the business gets into debt, you are personally liable — your personal assets (e.g., home, savings) are at risk.
👉 Limited Company:
● The company is a separate legal entity.
● Your liability is limited to the value of the shares you hold.
● Your personal assets are protected if the business runs into debt (unless you’ve given a personal guarantee).
✅ A limited company offers greater personal protection — ideal for freelancers working with higher-value contracts or clients.
The way you structure your business can affect how potential clients view you.
👉 Self-Employed:
● Seen as an individual freelancer.
● Suitable for small projects and personal clients.
👉 Limited Company:
● Seen as a more professional and established business.
● More appealing for corporate clients and higher-value contracts.
● Some larger companies prefer working with limited companies due to insurance and contractual requirements.
✅ A limited company can enhance your professional image and help win larger clients.
How you structure your business affects how you contribute to pensions and access benefits.
👉 Self-Employed:
● No access to employer pension schemes.
● Can only contribute to a private pension.
● No sick pay or employee benefits.
👉 Limited Company:
● Can set up a company pension and claim it as a business expense.
● Eligible for statutory sick pay and other employee benefits.
👉 Pension and Benefits Verdict:
✅ A limited company offers more financial flexibility and better long-term benefits.
🌟 When to Choose Self-Employed vs Limited Company
| Situation | Best Option |
| Earning under £30,000 | Self-employed (simpler and lower admin) |
| Earning over £30,000 | Limited company (more tax-efficient) |
| Wanting to protect personal assets | Limited company |
| Seeking corporate clients or larger contracts | Limited company |
| Flexible work with small clients | Self-employed |
| Wanting to reduce admin | Self-employed |
At Jungle Tax, we work exclusively with creative freelancers — so we understand the unique financial challenges you face. Whether you’re just starting out or considering switching to a limited company, we can provide tailored advice to help you make the right decision.
✔️ Business structure advice (sole trader vs limited company)
✔️ Tax planning to reduce liability
✔️ Registering your business with Companies House
✔️ Setting up payroll, VAT, and tax accounts
✔️ Claiming creative industry tax relief
✔️ Ongoing financial management and reporting
🚀 Need Expert Help? Get in Touch Today!
Choosing the right business structure is one of the most important decisions you’ll make as a creative freelancer. Let Jungle Tax Specialist Accountants for Creatives help you make the right choice — and maximise your financial success.
👉 Book a FREE consultation today:
📞 0333 880 7974
📧 hello@jungletax.co.uk
🌍 www.jungletax.co.uk
💡 Jungle Tax – Specialist Accountants for Creative Freelancers. Taking the stress out of tax for creatives. 🌿
