I am thinking about becoming a self employed consultant and am researching overheads etc. The PI insurance is a concern for several reasons (including, potentially, the need to continue cover for years after retirement just in case! - perhaps with no tax relief to soften the blow after you cease trading) It occurs to me that few consultants are prosecuted, does the same apply to civil suits? The question of competence is an issue and the likelihood of slipping up, although even the best of us can miss something. There is the question of cover. You could take cover of 1 million, be sued for 1.5 million, and still be ruined. It occurred to me that a limited company might be less exposed? Of course, directors can still be prosecuted, but their assets are outside the company, so does this provide a layer of protection? This is probably my main concern about self employment, so any views are appreciated. In every other way I am ready to take the step, as working in the back stabbing, toxic environment of a council (the one I work for anyway) is just intolerable.

Taffie, You are correct in your assumption that a Limited Company will provide you with a large degree of asset protection and because of that protection you are likely to need a much lower level of PI insurance (generally 0.5 - 1 million pounds of cover for a small business). In the event that you obtain a large contract, or one where the client requires a larger level of insurance, you can purchase additional cover at that time. With a Limited Company you need to be aware that as a director you are an employee of the company and you are treated as such for tax purposes. If you are going into partnership with at least one other person (whether a business partner or e.g. a spouse) you should also consider a Limited Liability Partnership. An LLP works in the same way as a company in terms of protection from liability but it offers the tax advantages of being a self-employed person. Good luck with the new venture. DJ