Sole trader is the simplest form of business — you and the business are the same legal entity, you file a Self Assessment each year, and you pay Income Tax and Class 4 NIC on profits.
A limited company is a separate legal entity. It pays Corporation Tax on its profits and you pay Income Tax and dividend tax on money you take out as salary or dividends.
For very low profits, sole trader is often more tax-efficient once you factor in the extra costs and admin of a limited company.
As profits grow — typically above £30–40k — a limited company becomes more efficient because of the split between low salary and dividends and the flexibility of retained profit.
Beyond tax, a limited company gives you limited liability protection and often makes it easier to win larger contracts, take on staff and raise investment.
There's no universal answer. The right structure depends on your profits, your appetite for admin, whether you have partners or investors, and how much money you need personally.