Setting up a limited company in the UK is one of the most straightforward things you will do as a business owner. The actual registration takes less than 24 hours online, costs £100, and can be done from your sofa. What takes longer is understanding whether a limited company is the right structure for you, getting your details in order, and knowing what obligations come with it.
This guide walks you through every step of how to set up a limited company, from deciding on your company name to filing your first accounts, with all fees and requirements updated for 2026.
Before You Start: Is a Limited Company Right for You?
A limited company is a separate legal entity from you as an individual. This means your personal assets (your home, your savings) are protected if the business runs into debt. It also means the company pays Corporation Tax on its profits rather than you paying Income Tax directly.
The main reasons to set up a limited company rather than operating as a sole trader are liability protection, tax efficiency once profits exceed roughly £30,000 to £40,000 per year, and professional credibility with clients and partners.
However, a limited company comes with more administration: annual accounts filed at Companies House, a Corporation Tax return to HMRC, mandatory identity verification for directors, and ongoing compliance requirements. If you are just starting out and expect to earn under £30,000 in your first year, operating as a sole trader is simpler and cheaper. You can always incorporate later.
If you have decided a limited company is the right path, here is how to set up a limited company in the UK step by step.
Step 1: Choose Your Company Name
Your company name must be unique on the Companies House register. Use their free name checker to confirm your chosen name is available before you begin the registration process.
A few rules to be aware of. The name must end in “Limited” or “Ltd” (or the Welsh equivalents). It cannot be offensive or include certain sensitive words (such as “Royal”, “British”, “Authority”, or “Insurance”) without special permission. It cannot be too similar to an existing registered company name.
Practical tip: Before settling on a name, also check whether a matching domain name and social media handles are available. Your company name and your brand name do not have to be identical, many businesses trade under a different name, but it helps if they align from the start.
Step 2: Confirm Your Registered Office Address
Every UK limited company must have a registered office address. This is a physical UK address (not a PO box) where official correspondence from Companies House and HMRC is delivered. It appears on the public register, which means anyone can look it up.
You can use your home address, a business premises, or a virtual office service. Many founders prefer a virtual office (typically £50 to £100 per year) to keep their home address off the public register. Services like these are widely available through formation agents and co-working spaces.
Step 3: Appoint Your Directors and Shareholders
A limited company needs at least one director (who must be a real person, aged 16 or over) and at least one shareholder. The director and shareholder can be the same person, which is common for single-founder businesses.
Directors are legally responsible for running the company and must comply with 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. For most single-founder setups, the standard approach is to issue 100 ordinary shares at £1 each, giving you 100% ownership. If you are setting up with a co-founder, this is where you agree on ownership splits before registering.
You also need to identify your Persons with Significant Control (PSCs), anyone who holds more than 25% of shares or voting rights, or who has significant influence over the company. For a single-founder company, this is simply you.
Step 4: Verify Your Identity
Since November 2025, all directors and PSCs must verify their identity with Companies House before or at the point of incorporation. This requirement was introduced under the Economic Crime and Corporate Transparency Act 2023 (ECCTA) to prevent fraud and improve transparency on the register.
You can verify your identity in two ways. Either directly through GOV.UK One Login, which involves uploading a photo ID and a selfie, or through a registered Authorised Corporate Service Provider (ACSP) such as an accountant or solicitor. If you use a formation agent to register your company, they can often handle identity verification as part of the process.
Once verified, you receive a personal code that you will use during registration and for future Companies House filings.
Step 5: Prepare Your Articles of Association
The Articles of Association are the rules that govern how your company is run: how decisions are made, how shares are issued, and how directors are appointed or removed.
Most small companies use the Model Articles provided by the government, which are standard templates that work perfectly well for straightforward businesses. You can adopt these as they are during registration. If your situation is more complex (multiple founders, different share classes, or investor involvement), you should have a solicitor draft bespoke articles.
Step 6: Register with Companies House
You are now ready to register. Go to the Companies House web incorporation service and complete the application. You will need your chosen company name, registered office address, details of all directors and shareholders, PSC information, your identity verification personal codes, your chosen SIC code (the standard classification code that describes your business activity), and your Articles of Association (or confirmation that you are adopting the Model Articles).
Fees as of February 2026:
Standard online registration: £100. This is processed within 24 hours on working days.
Same-day registration: £156. Guarantees same-day processing if submitted before 3pm.
Paper registration (form IN01 by post): £124. Takes 8 to 10 working days and has a significantly higher rejection rate. There is almost no reason to use this method unless you cannot access the online service.
Once approved, you receive a Certificate of Incorporation confirming your company number and the date of incorporation. Your company is now legally registered.
Step 7: Register for Corporation Tax with HMRC
Within three months of starting to trade, you must register for Corporation Tax with HMRC. This is separate from the Companies House registration. HMRC will send you a Unique Taxpayer Reference (UTR) for the company, which you will use for all tax filings.
Corporation Tax rates for 2026/27 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 your limited company. Mixing personal and company finances is not just messy, it can undermine the legal separation between you and your company that limited liability provides.
Most UK business bank accounts can be opened online. Options include traditional banks (Barclays, NatWest, HSBC, Lloyds) and digital-first banks (Starling, Tide, Monzo Business, Revolut Business). Several digital banks offer free business accounts with no monthly fees, which is ideal when you are just starting out.
You will typically need your Certificate of Incorporation and company details to complete the application.
Step 9: Set Up Your Accounting
A limited company must file annual accounts with Companies House and a Corporation Tax return with HMRC. You need a system for tracking income, expenses, and receipts from day one.
Cloud accounting software like Xero, QuickBooks, or FreeAgent (which is free with NatWest and Mettle business accounts) handles invoicing, expense tracking, and tax calculations. Most small company directors also hire an accountant, typically costing £800 to £1,500 per year for a simple single-director company, to prepare and file the annual accounts and tax return.
Your first accounts are due 21 months after incorporation, and then 9 months after your financial year-end annually. A Confirmation Statement must be filed at least once every 12 months, costing £50 digitally (as of February 2026).
Step 10: Consider VAT Registration
You must register for VAT if your taxable turnover exceeds £90,000 in any 12-month period. You can also register voluntarily below this threshold, which allows you to reclaim VAT on business purchases but requires you to charge VAT on your sales and file quarterly VAT returns.
For most new businesses, voluntary VAT registration only makes sense if your customers are other VAT-registered businesses (who can reclaim the VAT you charge) or if you have significant startup costs on which you want to reclaim VAT.
What It Costs: A Quick Summary
Company registration (online): £100
Same-day registration: £156
Annual Confirmation Statement: £50 per year (digital)
Accountant: £800 to £1,500 per year
Registered office service (if not using home address): £50 to £100 per year
Business bank account: £0 to £10 per month depending on provider
Accounting software: £0 to £35 per month depending on provider
Total first-year cost (excluding accountant): approximately £150 to £300. With an accountant: £950 to £1,800.
After Registration: Your Ongoing Obligations
Once your company is set up, you have several ongoing legal 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, confirming your company details are up to date.
Maintain statutory registers of directors, shareholders, and PSCs.
Keep your identity verification current with Companies House.
Missing filing deadlines results in automatic penalties and can lead to your company being struck off the register, so set calendar reminders or let your accountant manage the deadlines.
Common Mistakes to Avoid
Using your home address without thinking it through. Your registered office address is publicly visible. Consider whether you want your home address searchable by anyone on the Companies House register.
Not separating personal and business finances. Open a business bank account immediately and use it exclusively for company transactions. This protects your limited liability status and makes accounting far simpler.
Forgetting to register for Corporation Tax. Companies House registration and HMRC registration are separate processes. You must do both.
Choosing a name without checking trademarks. A name can be available at Companies House but already trademarked by another business. Check the UK Intellectual Property Office trademark register as well.
Assuming you need to do everything yourself. A good accountant pays for themselves many times over through tax savings, compliance peace of mind, and time you can spend actually running your business. 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.