Setting up a limited company in the UK is one of the most straightforward tasks you will face as a business owner. The online registration itself can be approved within 24 hours and currently costs £50. What takes longer is deciding whether a limited company is the right structure, gathering the required information, and understanding the ongoing obligations that come with it.

This guide walks you through how to set up a limited company in the UK, from choosing a company name to filing your first accounts, with fees and requirements accurate at the time of writing. Always check GOV.UK for the latest rates before you register.

Before You Start: Is a Limited Company Right for You?

A limited company is a separate legal entity from you as an individual. That means your personal assets are generally protected if the business runs into debt, and the company pays Corporation Tax on its profits rather than you paying Income Tax directly on everything it earns.

The main reasons to incorporate rather than operate as a sole trader are:

• Limited liability – your personal exposure is normally restricted to what you have invested or guaranteed.
• Tax efficiency – once profits exceed roughly £30,000 to £50,000 a year, a combination of salary and dividends can be more tax-efficient than sole trader profits.
• Professional credibility – some clients, lenders and suppliers prefer to deal with a limited company.

However, a limited company involves more administration: annual accounts filed at Companies House, a Corporation Tax return to HMRC, identity verification for directors, and ongoing compliance. If you are just starting out and expect to earn under £30,000 in year one, operating as a sole trader is usually simpler and cheaper. You can incorporate later.

If you have decided a limited company is the right path, follow the steps below.

Step 1: Choose Your Company Name

Your company name must be unique on the Companies House register. Use the free name checker before you start the registration process.

The name must end in “Limited” or “Ltd” (or the Welsh equivalents “Cyfyngedig” or “Cyf”). It cannot be offensive or include sensitive words such as “Royal”, “British”, “Authority” or “Insurance” without permission. It also cannot be too similar to an existing registered name.

Practical tip: Check that a matching domain name and social media handles are available. Your company name and trading name do not have to be identical, but aligning them from the start avoids confusion.

Also check trademarks. A name can be available at Companies House but already trademarked. Search the UK Intellectual Property Office trademark register before you commit.

Step 2: Confirm Your Registered Office Address

Every UK limited company needs a registered office address: a physical UK address where official post from Companies House and HMRC is sent. It appears on the public register, so anyone can look it up.

You can use your home address, a business premises, or a registered office service. Many founders use a commercial address or virtual office (typically £30 to £100 per year) to keep their home address private.

Step 3: Appoint Your Directors and Shareholders

A limited company needs at least one director (a real person aged 16 or over) and at least one shareholder. The same person can fill both roles, which is common for single-founder businesses.

Directors are legally responsible for running the company and must follow the duties set out in the Companies Act 2006. These include acting in the company’s best interests, avoiding conflicts of interest, and keeping proper records.

Shareholders own the company through shares. A typical single-founder setup is 100 ordinary shares at £1 each, giving you 100% ownership. If you have co-founders, agree ownership splits before you register.

You must also identify any Persons with Significant Control (PSCs): anyone who holds more than 25% of shares or voting rights, or who has significant influence. For a single-founder company, that is you.

Step 4: Verify Your Identity

Under the Economic Crime and Corporate Transparency Act 2023, directors and PSCs must verify their identity with Companies House. This is designed to reduce fraud and improve transparency on the register.

You can verify directly through GOV.UK One Login by uploading a photo ID and completing a biometric check, or through an Authorised Corporate Service Provider (ACSP) such as an accountant, solicitor or formation agent. Many formation agents include identity verification as part of their service.

Once verified, you receive a personal code that you will use during incorporation and for future Companies House filings.

Step 5: Prepare Your Articles of Association

The Articles of Association set out how your company is run: how decisions are made, how shares are issued, and how directors are appointed or removed.

Most small companies adopt the government’s Model Articles during registration. These work well for straightforward businesses. If your situation is more complex – multiple founders, different share classes or investor involvement – ask a solicitor to draft bespoke articles.

Step 6: Register with Companies House

You can register online through the Companies House web incorporation service. You will need:

• your chosen company name;
• registered office address;
• director and shareholder details;
• PSC information;
• identity verification personal codes;
• a SIC code describing your business activity;
• your Articles of Association (or confirmation you are adopting the Model Articles).

Current registration fees:

• Online registration: £50 – usually processed within 24 hours on working days.
• Same-day registration: £78 – must be submitted before 3pm.
• Paper registration (form IN01): £71 – takes 8 to 10 working days and has a higher rejection rate.

Once approved, you receive a Certificate of Incorporation showing your company number and date of incorporation.

Step 7: Register for Corporation Tax with HMRC

Companies House registration and HMRC registration are separate. Within three months of starting to trade, you must register for Corporation Tax. HMRC will send the company a Unique Taxpayer Reference (UTR) for tax filings.

Current Corporation Tax rates are 19% on profits up to £50,000 and 25% on profits above £250,000, with marginal relief for profits between these thresholds.

Step 8: Open a Business Bank Account

You need a separate bank account for the company. Mixing personal and company finances can weaken the legal separation that limited liability provides and makes accounting far harder.

Most UK business accounts can be opened online. Compare high-street banks and digital providers, and look for free or low-cost starter accounts. You will usually need your Certificate of Incorporation and company details.

Step 9: Set Up Your Accounting

A limited company must file annual accounts with Companies House and a Corporation Tax return with HMRC. Start tracking income, expenses and receipts from day one.

Cloud accounting software can handle invoicing, expense tracking and tax calculations. Many small company directors also hire an accountant – typically £800 to £1,500 a year for a simple single-director company – to prepare and file accounts and tax returns.

Your first accounts are due 21 months after incorporation, and then within 9 months of your financial year-end each year. A Confirmation Statement must be filed at least once every 12 months. The digital fee is currently £34.

Step 10: Consider VAT Registration

You must register for VAT if your taxable turnover exceeds £90,000 in any rolling 12-month period. You can also register voluntarily below this threshold, which lets you reclaim VAT on business purchases but requires you to charge VAT on sales and file VAT returns.

Voluntary registration usually makes sense only if your customers are VAT-registered businesses or you have significant start-up costs to reclaim VAT on.

What It Costs: A Quick Summary

• Company registration (online): £50
• Same-day registration: £78
• Annual Confirmation Statement (digital): £34
• Accountant: £800 to £1,500 per year
• Registered office service (if not using home address): £30 to £100 per year
• Business bank account: £0 to £10 per month
• Accounting software: £0 to £35 per month

Total first-year cost (excluding accountant): roughly £120 to £300. With an accountant: £920 to £1,800.

After Registration: Your Ongoing Obligations

• File annual accounts with Companies House within 9 months of your financial year-end.
• File a Corporation Tax return with HMRC within 12 months of your financial year-end, and pay Corporation Tax within 9 months and 1 day.
• File a Confirmation Statement at least once every 12 months.
• Maintain statutory registers of directors, shareholders and PSCs.
• Keep your identity verification current with Companies House.

Missing deadlines leads to automatic penalties and can result in your company being struck off, so set calendar reminders or ask your accountant to manage the dates.

Common Mistakes to Avoid

Using your home address without considering privacy. Your registered office is publicly visible. If you do not want it searchable on the Companies House register, use a registered office service.

Not separating personal and business finances. Open a business bank account immediately and use it only for company transactions.

Forgetting to register for Corporation Tax. Companies House and HMRC registrations are not the same. You must do both.

Choosing a name without checking trademarks. Always search the IPO trademark register as well as the Companies House name checker.

Trying to do everything yourself. A good accountant often pays for themselves through tax savings, compliance peace of mind and time saved. Budget for one from the start.

Already running a business as a sole trader and wondering whether to incorporate? Read our guide on registering as a sole trader in the UK to compare your options.