Introduction – A Year of Change and Opportunity
At Hammond & Co, we work with hundreds of sole traders every year — builders, consultants, hairdressers, landlords, and all kinds of small businesses.
If there’s one thing we’ve learned, it’s this: the best time to plan ahead isn’t when HMRC changes the rules — it’s before they do.
2025 is shaping up to be one of the most important years in recent memory for small business owners. Between frozen tax thresholds, higher compliance demands, and the upcoming Making Tax Digital for Income Tax Self Assessment (MTDITSA) changes, more sole traders are asking the same question:
“Should I move to a limited company now — or wait?”
Our answer is simple: now is the perfect time to get ahead.
In this article, we explain why incorporating early in 2026 gives you a head start, what the transition involves, and how Hammond & Co makes the whole process simple, structured, and stress-free.
The Cost of “Doing Nothing”
Here’s a truth many business owners don’t like to hear: doing nothing still costs money.
Every year we meet clients who delayed switching to a limited company because they thought it would be “too complicated” or “not worth it yet.” A year or two later, they’re paying more tax, facing quarterly MTDITSA submissions, and wishing they’d acted sooner.
Here’s why waiting doesn’t pay:
- You pay more tax than necessary
Once profits climb past £40,000–£50,000, sole traders often pay thousands more in tax and National Insurance than they would as limited company directors.
- You lose control over timing
When MTDITSA comes into force in 2026, sole traders with income over £30,000 must file quarterly updates. Last-minute incorporations will be stressful and expensive.
- You miss the opportunity to plan properly
Incorporation works best when carefully mapped out. That means setting up accounting software, tax structure, payroll, and dividends correctly from day one. Doing it under time pressure often leads to mistakes.
At Hammond & Co, we’ve seen the difference that acting early makes — it’s not just financial. It’s peace of mind, better planning, and confidence that your business is ready for the future.
The Benefits of Moving Early
Moving to a limited company isn’t a rush job — it’s a strategic decision. Starting early in 2026 gives you:
- More time to plan your salary and dividends
Incorporating at the start of a tax year lets us structure your director’s pay in the most tax-efficient way. It’s not just what you pay, it’s how and when.
- A clean bookkeeping start
We set up your company records in Xero, Dext, and Hubdoc — fully integrated and MTDITSA-compliant. No messy crossover between old records and new company books.
- Early access to tax savings
At the right profit level, incorporation can save £2,000–£3,000 per year — before pension contributions or family shareholdings are factored in.
- Future-proofing before MTDITSA
Limited companies are already used to structured reporting, annual accounts, and digital filing. By incorporating now, you’ll enter 2026 compliant, calm, and confident — while others scramble.
At Hammond & Co, our goal is to make sure you’re ahead of the curve.
The 2026 Accounting Landscape
MTDITSA (Making Tax Digital for Income Tax Self Assessment)
From April 2026, sole traders and landlords with income over £30,000 must file quarterly updates. More deadlines, more admin, and more reliance on software.
As a limited company, you’re already working in a digital system. Xero, Dext, and Hubdoc handle day-to-day transactions; we review your data quarterly, submit reports, and plan for your tax in advance.
Frozen Tax Thresholds
When personal allowances and tax bands don’t rise with inflation, more income falls into higher tax brackets (“bracket creep”). Limited companies let us manage pay via salary, dividends, and pension contributions — controlling your personal tax position.
More Scrutiny, Less Simplicity
HMRC’s digital audits are increasing. Being organised isn’t optional — it’s essential. Our digital systems are built around compliance, automation, and accuracy, keeping all clients ahead.
How Hammond & Co Supports Every Step
When moving from sole trader to limited company, there’s a lot to handle — but that’s where we excel:
- Full incorporation process
We register your company with Companies House, notify HMRC, and handle all initial setup.
- Software setup
Xero, Dext, Hubdoc create a MTDITSA-ready digital record-keeping system with real-time visibility.
- Director pay structuring
We find the most tax-efficient mix of salary, dividends, and pension contributions.
- Long-term planning
Clients attend a Month-9 Tax Planning Meeting to review performance, forecast profits, and adjust before year-end.
- Personal, approachable support
You’ll have a dedicated contact to walk you through each step — no jargon, no confusion, just clarity.
Client Example – Getting Ahead Early
A Derbyshire plumber approached us in 2024. Profits were growing quickly, but he was paying ~£9,000 a year in tax and National Insurance.
We incorporated his business at the start of 2025, structured his pay, added his wife as a shareholder, and set up pension contributions.
Result: First-year tax dropped by over £2,800. He said he finally felt like he was “working for the business, not the taxman.”
Why “Later” Is Too Late
Waiting to incorporate risks:
- Starting mid-year, splitting accounting periods
- Less time to plan tax-efficient withdrawals
- Missing another year of potential savings
Early planning makes the first year smooth, compliant, and financially advantageous.
Why Choose Hammond & Co
We’re more than accountants — we’re partners in your business journey. From compliance to strategy, software setup to salary planning, we ensure you start as you mean to go on.
Our approach is guided by five values: Flexibility, Persistence, Positivity, Trust, and Teamwork.
We’re local, approachable, and human — always someone you can call, not just an online portal.
Conclusion – 2026: The Smart Year to Switch
The best time to incorporate is before HMRC forces your hand.
By acting now, you can:
- Lock in a full year of tax savings
- Build digital systems that meet future HMRC rules
- Plan your pay structure in advance
- Enter 2026 organised, compliant, and confident
At Hammond & Co, we’ve helped hundreds of clients transition seamlessly — we’d love to do the same for you.
📞 Call: 01246 563414
📧 Email: admin@hammondbusiness.co.uk
🌐 Visit:Hammond & Co
2026 is your year to take control, reduce tax stress, and build a stronger business foundation.