But when IR35 was introduced the dividends weren't really taxed at all. In fact there were even some tax credits related to dividends for a while. Today the sit

But when IR35 was introduced the dividends weren't really taxed at all. In fact there were even some tax credits related to dividends for a while. Today the situation is completely different and the tax rates on dividends are not far off NI levels at lower income levels and much worse higher up (because employee NI drops to a very low rate once you're a higher rate tax payer but dividend taxes are uncapped). Once you factor in things like the contractor's Ltd paying for its own running costs, time off for things like holidays or sickness, and pension contributions it makes very little sense for someone to go the Ltd route instead of being an employee just for tax/financial reasons now. The real advantages are in flexibility and having a real business-to-business relationship with clients, which can break various glass ceilings you might otherwise hit as an employee.