Why shouldn't I be a sole trader?

[raspberrypie]

I'm just about to start a job working mainly from home for an agency. I'll do the work, send it on to the client, and then bill the agency for my time. No employees, no business premises, no car or other particularly notable expenses. No need for 'prestige' - I'm marketed through my agency. Just me and a laptop. I'll only be working approx 15hrs/wk, term-time only (so probably about 40 wks/yr). No other job so will have an annual gross income of about £14-20k.

I've been doing some sums and am trying to decide between being a sole trader or a limited company. I appreciate the theoretical advantages of a limited company, but can't see that they're actually that great for me (earning this amount); particularly when you take into account the fact I'd have to pay an accountant to do my figures it seems like I'd be better off just being a sole trader.

Am I missing something?

you could save between £500 (£14k) and £1100 (20k) tax overall.
Would you employ an accountant to do your self-employed tax return? If so then it wouldn't cost much more at all to do it for a company and it might be worthwhile.
If not, then you are probably right in that the saving would be minimal.

I would question whether you are actually am employee of the agency though?

The tax laws have changed over the last few years, such that it's only really worth being a ltd co if you're a) paying higher rate tax or b) not spending all your income each year. For anyone else, the amount you save will pretty much be eaten up by the extra accountants fees.

I did have a ltd co a while ago (in pre-child days when I earned more) but was advised by my accountant that, earning less, it wasn't worth the expense of keeping it going any more.

But do remember that you can charge a nominal amount for use of your home/electricity/insurance etc etc regardless of what you are set up as. A good accountant should be able to save you enough money to cover the fees you pay them, giving you advice on expenses etc.

that point is not strictly true.
Under the current tax rates you will pay less tax as with a company set up rather than a sole-trader, regardless of whether you take all the income or not.
This is true for all rates of company and personal tax.

It then depends on what you would pay in accountants fees in either scenario - and if you are capable of doing your own sole trader accounts there is no reason why you shouldn't do the vast majority of the company stuff and have a minimal accountancy bill.

Even at £14k income you would save £500 tax.

onesandwichshort that is absolutely not true - in fact the advantages of earning through a company have actually diminished substantially for the higher rate taxpayer in recent years.

However I agree with ChasingSquirrels, the biggest issue here is whether the OP is an employee of the agency. As a sole trader, this is the agency's problem, but if you do it through a company, it becomes your problem because of IR35.