This is a question we get asked frequently. Currently sole traders have to pay personal tax on their profits, class 2 national insurance and class 4 national insurance on profits over £8424 at 9% up to £46,350 at which point Class 4 NI is 11%. Sole traders have to pay a payment on account if their annual tax bill exceeds £1000.
Limited companies do not have to pay payments on account or national insurance but have to pay 100% of their corporation tax 9 months after the year end at a rate of 19% on profits.
Limited companies can have shareholders unlike soletraders. When taking the combined personal tax and corporation tax liability for limited companies vs tax and national insurance for soletraders, the rough tipping point is if you have profits of £12,000 or more, it would work out to be more efficient for tax purposes to be a limited company.