There is rarely a single right answer
Both structures are common among locums. Which suits you depends on your income, how it is likely to change, how you work and what you want from the arrangement.
Questions to consider
- Tax: how profits are taxed under each structure, and how that changes as income rises.
- Taking money out: a company usually involves choices about salary and dividends; a sole trader is taxed on profits whether or not they are withdrawn.
- Administration: a limited company brings company accounts, filing deadlines and usually payroll; a sole trader has a simpler process.
- NHS Pension: how your pension position interacts with each structure.
- Risk and privacy: a company is a separate legal entity, and its filings are public.
- How engagements are structured: some arrangements and agency terms affect whether a company is practical.
- Costs: accountancy and compliance costs generally differ between the two.
Timing
Moving structure has tax and administrative consequences, so the timing and the practicalities are worth planning rather than reacting to a single year’s figures.
This page gives general information only and is not personal advice. Rules, rates and thresholds change, so check current guidance before acting.