You are correct on both of the points you raise. The example was simplistic by taking all of the dividends out to make it a straightforward comparison with a s

You are correct on both of the points you raise. The example was simplistic by taking all of the dividends out to make it a straightforward comparison with a salaried employee who also has to take all of their and thus do not get to defer their tax. Being able to choose when you pay tax is one of the biggest advantages of working through a UK Ltd company. But by choosing when you pay you hardly avoid paying tax. The bill will be due sooner or later. As for legal ways to reduce the corporation tax you pay, I would love to hear more as the options I know of would be to setup pension contributions or doing a voluntary liquidation. (which is only an option for the day you decide to stop contracting as you are not allowed to be a director of a UK limited company for 2 years after completing the liquidation) Every contractor accountant I have spoken with has given the same advice. So if what you are doing is legal I would be interested to hear who your accountant is. Always remember that your accountant won't be the one that HMRC comes after if you followed dodgy advice.