Limited Company Accountancy Services
Accountancy Services and Tax Planning for Limited Company Contractors
Whether you’re a graphic designer or finance consultant, web developer or healthcare specialist, being a professional contractor means taking care of your own business. There’s no one there to manage your pay, tax and deductions, and there’s no one there to set your salary. You need to handle all of this yourself, including submitting tax returns, deciding the most effective way of paying yourself and operating in a way that keeps you financially stable. This can all feel a bit daunting, but it’s usually just a case of getting your head around a few key responsibilities.
At Go Limited, we’ve seen the difference tax planning and accountancy services can make for limited company contractors. The more you know and the more help you have, the more tax-efficient you can be.
Why is Limited Company Tax Planning So Important?
If you’re a contractor operating through a limited company, tax planning is key. When you keep your taxes organised and planned, you can minimise your tax liability in a legal, fully compliant way. But, without limited company tax planning, you run the risk of overpaying tax, missing out on allowable expenses and facing penalties due to tax mistakes and late submissions
Here’s Why Limited Company Tax Planning Matters
- Maximising Take-Home Pay - By structuring how you take money from your company - if you’re like a lot of contractors, you’ll want to take your income through a combination of salary and dividends - you can significantly reduce the amount of tax you pay compared to traditional employment.
- Navigating Complex Tax Rules - We can all agree that the UK tax system can be complex, especially if you’re operating through a limited company. You have to navigate corporation tax, income tax, dividend tax, VAT, National Insurance contributions (NICs) and more. It’s a lot to keep on top of. Knowing how these interact is key to minimising tax while staying legal.
- Budgeting and Forecasting - With a strong tax plan in place, you can forecast your future tax liabilities and avoid cash flow issues, as you’ll always know what needs to be paid and when. This is particularly important if your income varies month to month.
- Staying Compliant with IR35 - If you’re a contractor, you’ll have to deal with IR35 compliance. IR35 legislation has significant implications for contractors, but tax planning helps you to ensure you’re always on top of things. This is especially important if your contracts vary, and sometimes you’re working inside IR35, and other times you fall outside IR35. Effective tax planning can help to determine your status.
Does Tax Planning Help to Reduce Limited Company Tax?
Yes, tax planning does help to reduce limited company tax. You don’t want to be paying more tax than you need to, but that’s a risk if you don’t plan properly. Many contractors don’t often realise just how many options are available to reduce tax bills legitimately, meaning a lot miss out on saving money. This doesn’t mean focusing on limited company tax avoidance, it means finding ways to use the rules to your advantage.
There are various ways to use limited company tax planning to your advantage, including paying a tax-efficient salary that utilises your Personal Allowance and claiming business expenses such as travel, equipment and professional fees. Distributing profits via dividends to take advantage of lower tax rates is also an option. When implemented correctly, tax planning strategies help retain more of your income.
Ready to Reduce Limited Company Tax?
A big part of tax planning for limited company contractors is aimed at reducing how much tax you owe. For example, using a low salary and dividends mix. Paying yourself a small salary, one that falls just below the NICs threshold, and topping the rest up with dividends can significantly reduce your tax bill. This is because dividends are taxed at a lower rate than salary, and so any income you take in the form of dividends will have less tax deducted.
You also need to claim all legitimate business expenses available to you. When you claim limited company expenses, you reduce the profits that you’re taxed on, reducing your tax bill. Common allowable expenses include mobile phone and internet bills, office and home office costs, travel, subsistence, equipment, software and accounting fees. Plus, don’t forget to review your VAT position. If your turnover exceeds a certain amount - for 2025/26, the threshold is £90,000 - you need to register for VAT. The Flat Rate Scheme (FRS) can be beneficial for some contractors, especially those with low expenses, so determine if you’re eligible.
Limited Company Accountancy Services: The Benefits of Professional Help
Now you know the benefits of tax planning, you need to think about how you’re going to approach it. There’s a lot that goes into limited company taxes, which is why a lot of business owners struggle to handle things themselves. If that’s the case, you’re not alone. In fact, a number of limited company contractors hand things over to professionals. While you can attempt to manage your accounts yourself, and there’s no problem with doing that, many contractors find it far more efficient and financially rewarding to work with a specialist limited company accountant.
- Compliance with Confidence - Trust us, HMRC tax rules and regulations can be confusing, and penalties can be steep if you submit your tax return late or you make a mistake. A limited company accountant makes sure that key deadlines are met, taxes are calculated correctly and everything is submitted on time. You can sit back, relax and focus on other aspects of running a business, knowing your tax compliance is in safe hands.
- Tax Efficiency - With ways to reduce your limited company tax and allowable expenses, you’ll want to make sure that you’re being as tax-efficient as possible. An experienced limited company accountant will recommend strategies to reduce tax, including those you might not have considered. They’re the experts, and they’re privy to tax-saving strategies many contractors aren’t aware of.
- Time and Stress Savings - Regardless of the industry that you work in, you’re bound to have a lot of things to do. There’s managing payroll, keeping on top of VAT, remembering to track your expenses, and organising year-end filings. That’s not to mention the day-to-day work you have to do, including providing services to clients. Handing accountancy tasks over to a limited company accountant allows you to focus on delivering your services and growing your business.
How to Choose the Right Limited Company Accountants for You
To truly get the most out of tax-efficient contracting, and to make sure your tax planning is up to scratch, you’ll want to work with the right limited company account. There are a lot of specialists out there, so knowing which one to choose is key. Here are some of the main things to consider:
- Contractor Specialism - When you’re working with a limited company accountant, you need to make sure that they’re a specialist. This means understanding IR35, dividend structuring and contractor tax rules. Though generalist accountants can provide a similar service, they may miss industry-specific nuances that could help to reduce your tax bill in a significant way.
- Transparent Pricing - There’s a lot to pay out as a limited company contractor, and knowing what to expect helps with budgeting. Look for a limited company accountant with fixed monthly fees and no surprise charges. It’s helpful to know what you have to pay, when you have to pay and what you’re getting for your money.
- Cloud-Based Tools - Modern accounting firms should provide or support cloud accounting software, allowing you to track income, expenses and tax liabilities from wherever you are. Regardless of how hands-on you plan to be, knowing you can access cloud-based tools can simplify the entire accounting process.
- Personal Service - When you’re paying for an accountant, you want to know that you’re getting the best service possible. This means finding an expert who provides a professional, consistent service, with a professional, consistent point of contact.
- Good Reviews and Referrals - With so many limited company accountants out there, reviews, recommendations and referrals can point you in the right direction. Look at testimonials, reviews, or recommendations from fellow contractors to see who stands out as being a reputable choice for your industry.
At Go Limited, we’ve seen how beneficial it can be to operate through a limited company as a contractor. But, only if you take full advantage of tax planning and professional support. With our advice, you can minimise tax, stay compliant and ensure that your business thrives financially both now and in the future.
FAQs
Limited Company Contractors, Tax Planning & Accountant Support
1. What is limited company tax planning and why is it important for contractors?
Limited company tax planning helps contractors:
- Reduce tax liability legally
- Claim business expenses effectively
- Forecast and budget for tax payments
- Stay HMRC-compliant and avoid penalties
It’s essential for improving financial stability and maximising income.
How can I reduce my tax bill as a limited company contractor?
To lower your tax bill, consider:
- Taking a low salary and topping up with dividends
- Claiming allowable expenses (travel, software, equipment)
- Registering for VAT, and possibly using the Flat Rate Scheme
- Contributing to a pension through your limited company
What expenses can I claim through my limited company?
You can claim many tax-deductible business expenses, including:
- Mobile phone and internet bills
- Office and home office costs
- Travel and accommodation for work
- Professional services (accountants, legal advice)
- Work-related equipment and software
These help reduce your taxable profit.
What’s the best way to pay myself from my limited company?
Many contractors choose to:
- Pay a low salary (within Personal Allowance or just below NIC thresholds)
- Take dividends from company profits
- Minimise National Insurance contributions
This method is usually more tax-efficient than a full salary alone.
Do I need an accountant if I run a limited company?
While you can do it yourself, a contractor accountant offers:
- HMRC compliance and deadline management
- Expert advice on tax efficiency and IR35
- Time savings and reduced admin stress
- Help with payroll, VAT, and year-end filings
How does IR35 impact limited company contractors?
IR35 legislation determines whether you're:
- A genuine self-employed contractor (outside IR35), or
- A disguised employee (inside IR35)
If you're inside IR35, you’ll pay higher tax, so staying on top of this with proper advice and planning is essential.
When should I register for VAT as a contractor?
You must register if your turnover exceeds £90,000 (as of 2025/26).
Consider:
- Standard VAT Scheme, if you have significant expenses
- Flat Rate Scheme (FRS), if your expenses are low — you pay a fixed rate and keep the difference
An accountant can help assess your eligibility and savings potential.
What should I look for in a limited company accountant?
Look for accountants who offer:
- Specialist contractor knowledge (IR35, dividends, tax strategy)
- Fixed monthly pricing
- Cloud accounting tools for real-time tracking
- A dedicated point of contact
- Good reviews or referrals from other contractors
Can I manage my contractor taxes without an accountant?
Yes, but consider the risks:
- Complex rules for IR35, VAT, expenses, and dividends
- Potential for penalties or missed tax-saving opportunities
- Time-consuming admin that takes you away from billable work
Most contractors find that an accountant saves money in the long run.
How can Go Limited help me as a contractor?
Go Limited offers:
- Specialist accountancy for limited company contractors
- Advice on salary vs dividends, IR35, expenses, and VAT
- Cloud-based tools for simple tax tracking
- Help with tax returns, payroll, and HMRC compliance
We help contractors keep more of what they earn, with less hassle.
Important:
Please note: Any rates and thresholds mentioned in this article are correct at the time of publishing and may be subject to change.
When choosing an accountant, look for one with proven experience and expertise in the contracting sector, particularly around areas like IR35, limited company tax matters and off-payroll working. Formal qualifications are important, but relevant hands-on knowledge matters just as much — especially in a complex and fast-changing landscape like this.
