Is a limited company worth it on £50k revenue?
£50k is the point where people start asking us this question seriously, and it’s also the point where the answer stops being a simple yes or no.
Revenue isn’t the number that decides this
What matters is profit after costs, because that’s what gets taxed. A consultant billing £50k with almost no expenses is in a very different position to a small ecommerce operation billing £50k with £30k tied up in stock and fulfilment. The first person might be flirting with higher rate tax as a sole trader. The second might not be anywhere near it.
Where the crossover typically sits
As a very rough guide, once profit (not turnover) starts pushing past the point where a chunk of it would be taxed at the higher Income Tax rate, incorporating starts to genuinely save money, often a few thousand pounds a year once accountancy costs are netted off. Below that, the saving is often small enough that it’s not worth the extra admin.
This is exactly the kind of number a rule of thumb gets wrong and a calculator gets right. Our salary vs dividend calculator takes your actual profit and shows you the difference to the pound, both structures, side by side.
Don’t forget liability
If your work carries meaningful risk, client contracts, professional advice, anything where a mistake could get expensive, that can justify incorporating even if the tax saving alone wouldn’t. It’s worth weighing both factors together rather than treating this purely as a tax question.