Say you end up with a dreadful contract and everything goes wrong and the client sues. If you're a ltd company you can dissolve the business and pay them out of whatever assets your company has.
If you're a sole trader you're liable for all the costs. Until you're personally bankrupt. Sure, there may be clauses in the contract etc, but if someone is mean enough they can make your life very difficult and they will exploit the fact you are a sole trader.
If you don't own a house and are brining in less than £70K PA it may or may not be worth registering a Limited company.