Sole Trader or Limited Company
Written and reviewed by the Personal Trainer Accountants editorial team. Last reviewed 8 August 2026.
Almost every trainer who grows past a certain point gets told they should go limited. Sometimes that is right and often it is repeated without anyone doing the arithmetic for that particular business.
There is no profit figure at which incorporating automatically wins. What follows is what actually differs, so the decision can be made on your numbers rather than on a rule of thumb from a forum.
How the Two Are Taxed
A sole trader pays income tax and Class 4 National Insurance on business profit, whether or not the money is taken out. For 2026 to 2027 Class 4 is 6% on profits between £12,570 and £50,270 and 2% above.
A limited company is a separate legal person. It pays Corporation Tax on its profit, and you are taxed separately on what you take out, usually as a mix of salary and dividends. Money left in the company is not taxed on you personally until it comes out, which is the main structural advantage and it only matters if you can genuinely leave money in.
That last condition is the one that decides most cases. A trainer taking every pound out to live on captures far less of the benefit than the general advice implies.
The Simplified Expenses Trap
Simplified expenses cannot be used by limited companies, or by business partnerships that involve a limited company. That means incorporating costs you both flat rates: the 55p mileage rate and the £10, £18 or £26 monthly home working rate.
For a trainer driving a lot between clients this is not a rounding error. At 6,000 business miles the mileage flat rate alone is worth £3,300 of deductible expense a year, and a company has to deal with actual costs, business use apportionment and the different treatment of a vehicle owned by the company instead. The detail on both rates is on the expenses page.
This almost never appears in the comparison when someone advises a trainer to incorporate, and for a mileage-heavy training business it can swallow the tax saving on its own.
Administration and Filing Differences
A sole trader files a self assessment return, and quarterly updates as well once Making Tax Digital applies. A company files annual accounts and a confirmation statement at Companies House, a Corporation Tax return with HMRC, and usually payroll filings for the director's salary, on top of the director's own self assessment.
Company accounts are also on the public record. Some trainers do not mind and some are surprised to find their figures visible to clients and competitors.
None of that is a reason not to incorporate. It is a reason to price the additional work into the comparison rather than comparing tax alone.
When Incorporating Starts to Make Sense
The honest answer is when several things line up at once: profit comfortably above what you need to live on, so money can stay in the company; low business mileage, so the flat rate is not worth much to you; a reason to want limited liability, such as employing people or holding premises; and a willingness to take on the extra filing.
A trainer with high profit, a car doing 10,000 business miles and no need for limited liability is a much closer call than the internet suggests. HMRC sets out the sole trader position in its self-employed National Insurance guidance, and the restriction on flat rates is stated on its simplified expenses page.