How to Set Up a Limited Company in the UK: A Step-by-Step Guide

Setting up a limited company in the UK is one of the easiest things you'll do as a founder. The whole process can be done online, it costs £100, and most companies are registered within 24 hours.

I've set up three. The first one took me a weekend because I overthought every decision. The second took 40 minutes. By the third, I did it on a train.

But there are things that trip people up — mostly because the guides they're reading are out of date. Companies House changed its fees on 1 February 2026. Online company formation now costs £100, up from £50. There's a new mandatory identity verification requirement for all directors. And the annual confirmation statement went from £34 to £50. If the guide you're reading says £12, close it.

This guide walks you through how to register a limited company in the UK in 2026 — from choosing a company name and setting up a business address to filing your documents and getting your certificate of incorporation.

Why Set Up a Limited Company?

You don't have to. Plenty of people start as sole traders and do perfectly well. But there are real reasons most startup founders choose to create a limited company instead.

Your personal stuff is protected. A limited company is a separate legal entity. If the business runs into debt or gets sued, your house, your savings, and your car aren't on the line. As a sole trader, everything you own is fair game. That difference alone is why most founders go Ltd.

Tax can be lower. Corporation Tax on profits up to £50,000 is 19%. A sole trader earning the same pays 20% income tax plus National Insurance on top. The gap gets wider as you earn more. You can also pay yourself through a mix of salary and dividends, which is usually more tax-efficient than taking everything as income.

Investors and clients take you more seriously. Banks, VCs, angel investors, and government grant schemes almost all require you to be a registered limited company. Larger clients often won't contract with sole traders. Having "Ltd" after your name signals that you're a proper business, not a side project.

Your company name is protected. When you register a limited company with Companies House, nobody else in the UK can register under the same name. Without registration, another business could take your name tomorrow.

You can raise investment. A limited company can issue shares. A sole trader can't. If you ever plan to bring in co-founders, investors, or run an EMI share option scheme for employees, you need a limited company structure.

If you're testing an idea with minimal risk and no plans to hire or raise money, starting as a sole trader is fine. But if you're building something you intend to stick with, set up a limited company from day one. Switching later is doable but annoying.

Before You Start: What You'll Need

Get these ready before you begin the registration process. Having everything to hand is the difference between a 30-minute process and a week of back-and-forth.

A company name. Checked for availability on Companies House and the UK Intellectual Property Office trademark database.

A business address. This is your registered office address — where official post from Companies House and HMRC goes. It's publicly visible, so think about whether you want your home address on the public register.

Director details. At least one director, aged 16 or over. You'll need their full name, date of birth, nationality, home address, and occupation.

Shareholder details. At least one shareholder (can be the same person as the director). You'll need to decide how many shares to issue and at what value.

SIC code. A five-digit number that tells Companies House what your business does. You can look these up on the Companies House website. Pick the one that best matches your main activity.

Identity verification. Since November 2025, all proposed directors and persons with significant control must verify their identity before the company can be registered. You do this through GOV.UK One Login — upload a photo ID, take a selfie, done. Takes about five minutes and you only need to do it once.

Step 1: Choose a Company Name

This sounds fun until you discover every good name is taken.

Check Companies House first. Use the free name availability checker to see if your exact name (or anything confusingly similar) is already registered. If "Acme Tech Ltd" is taken, "Acme Technology Ltd" will probably be rejected too.

Check for trademarks. A name can be available at Companies House but trademarked by another business. Search the UK Intellectual Property Office database. If someone has trademarked the name, you'll lose a legal fight even if Companies House let you register it.

Check domain availability. Before you register the company, check whether the .co.uk and .com domains are available. Buy them first. Losing a domain to a squatter while you're filling in paperwork is incredibly frustrating.

Restricted words. Some words need special permission — "Royal," "Bank," "Authority," "Government," "British," and similar. You can't use them without approval, and approval is hard to get.

Offensive or misleading names are banned outright.

Want to drop "Limited"? You can only do this if your company has charitable or community-focused objectives. It requires a postal application with extra documentation — you can't do it through the standard online registration.

If your first-choice name is taken, try adding a descriptor — "Solutions," "Group," "Studio," "HQ" — to make it unique. Or rethink entirely. A name you love that's legally contested is worse than a name that's fine and fully available.

Step 2: Choose a Business Address

Every company in the UK needs a registered office address. This is where Companies House and HMRC send official correspondence. It goes on the public register, which means anyone can look it up.

You have three options.

Your home address. Free, simple, and perfectly legal. The downside: your home address becomes publicly visible. Anyone searching your company on Companies House can see where you live. I did this for my first company and regretted it when someone mentioned they'd looked up my address. Not dangerous, just uncomfortable.

A physical business address. If you have an office, studio, or co-working space with a fixed address, use that. It needs to be in England, Wales, Scotland, or Northern Ireland — matching the country you're registering in.

A virtual office address. Services like Hoxton Mix, Regus, or 1st Formations give you a professional business address — often a prestigious London location — for about £10–£50 per month. Post gets forwarded or scanned. Your home stays private. For most founders, this is the sweet spot between cost and privacy.

Your registered office address doesn't have to be where you work. It just has to be a real UK address that can receive post.

Step 3: Verify Your Identity

This is the step that catches people off guard because it's relatively new.

Since 18 November 2025, every proposed director and every person with significant control (PSC) must complete identity verification with Companies House before the company can be registered. No verification, no registration.

You verify through GOV.UK One Login. Upload a photo ID (passport or driving licence), take a selfie, the system matches them. It's like setting up a bank account on your phone. Takes about five minutes.

Once verified, you get a personal code from Companies House. Save it somewhere safe. You can reuse it for future companies — you only verify once.

If you're setting up a limited company with co-founders, they each need to verify independently before you submit the registration. This is the step that causes delays. Get everyone verified before you sit down to register.

For existing companies: all current directors and PSCs need to verify by 18 November 2026. Don't wait for the deadline.

Step 4: Appoint Directors and Shareholders

A UK limited company needs at least one director and at least one shareholder. The director and shareholder can be the same person, so a one-person company works fine.

Directors run the company and are legally responsible for making sure it complies with company law. They must be at least 16 and not be disqualified. Directors don't need to be UK residents — foreign nationals can be directors of UK companies. Though I'll mention: some banks get difficult about opening accounts if there's no UK-based director. Not a legal issue, but a practical one.

Shareholders own the company. They hold shares, vote on major decisions, and receive dividends. You can have one shareholder or hundreds.

Persons with significant control (PSCs) are anyone who holds more than 25% of shares or voting rights, or who can appoint or remove a majority of directors. Their details go on the public register. For a single-founder company, you're the PSC.

Step 5: Set Up Your Share Structure

You need to issue at least one share to create a limited company. Most founders go with 100 ordinary shares at £0.01 each — total share capital of £1.

Why 100? Because it gives you a clean percentage structure. If you later bring in a co-founder (50 shares each = 50/50) or an investor, the maths is straightforward.

You can create different share classes with different voting rights and dividend entitlements, but don't overcomplicate this at registration. Keep it simple. You can restructure later when you actually need to — usually when you raise investment and a lawyer gets involved anyway.

Step 6: Prepare Your Documents

You need three things to register a limited company with Companies House.

Form IN01. Your application for registration. It includes your company name, registered office address, director and shareholder details, share capital structure, and SIC code.

Memorandum of Association. A short legal statement signed by all shareholders confirming they want to form the company. It's a standard document — you don't need to draft it from scratch.

Articles of Association. The rules for running the company — shareholder rights, director responsibilities, decision-making processes. Companies House provides standard model articles that work for most startups. Use them unless you have a specific reason for custom articles (you probably don't at this stage).

Step 7: Register Your Limited Company

You can register a limited company online, by post, or through a formation agent.

Online registration: £100. The fastest and cheapest route. Processed within 24 hours, often within a few hours. This is how most companies are formed in the UK.

Same-day registration: £156. Available via software filing only. Submit before 3 PM on a working day and your company is registered the same day.

Postal registration: £124. Download Form IN01, fill it in, write a cheque for £124 payable to "Companies House," and post it. Takes 8–10 working days.

For the vast majority of founders, online registration at £100 is the obvious choice.

Step 8: Using a Formation Agent (Optional)

Companies like 1st Formations, Rapid Formations, and Companies Made Simple handle the whole process for you. They typically charge £15–£100 on top of the Companies House fee and often bundle extras — a registered business address, help with the identity verification, and business bank account introductions.

Worth it if you've never done this before and want some hand-holding. Not necessary if you're comfortable following a step-by-step process online. The Companies House registration system is genuinely user-friendly.

Business platforms like Tide, ANNA Money, and SeedLegals also offer company formation integrated into their services. Useful if you plan to bank or do legal work through them anyway.

Step 9: Get Your Certificate of Incorporation

Once Companies House approves your application, they issue a Certificate of Incorporation. This confirms your company legally exists and includes your unique Company Registration Number (CRN).

With this certificate you can open a business bank account, register for VAT (if applicable), apply for business loans and grants, hire employees, and start trading.

Congratulations — your company was set up. Now the real work starts.

Step 10: Register for Corporation Tax and PAYE

This is the bit people forget and then get caught out six months later.

Corporation Tax. When you register a limited company online, HMRC usually gets notified automatically. They'll post you a 10-digit Unique Taxpayer Reference (UTR) within a few days. When it arrives, log into your Government Gateway business account and add Corporation Tax as a service. Do this immediately — even if you're not trading yet. People who put it off forget entirely and miss their first filing deadline. The penalty starts at £100.

PAYE. If you're hiring anyone — even paying yourself a salary as a director — you need to register for PAYE. Dividends don't go through PAYE, but salary does. You can register during the company formation process on many platforms, or separately through HMRC. Once registered, set up payroll through software like Xero, Sage, or QuickBooks Payroll.

Employer NI is 15% on earnings above the £5,000 secondary threshold. The Employment Allowance (£10,500 for eligible employers) can offset this — claim it through your payroll software.

What Everything Costs

Here's a realistic breakdown of setting up a limited company and running it through year one.

Company registration: £100 online, £124 postal, £156 same-day. Formation agents add £15–£100 for their service.

Confirmation statement: £50/year online. Filed annually to confirm your company details are correct. Miss the deadline and the fines are automatic — £150 for up to a month late, escalating from there.

Business bank account: Free with Starling, Monzo Lite, Mettle, and Tide Free. Traditional banks offer 12–24 months free, then £7–£12/month.

Accountant: £300–£1,000/year for a small business accountant. Cloud accounting software (Xero, QuickBooks, FreeAgent) costs £10–£30/month and can delay this cost if you're comfortable doing your own books.

Registered office address: £10–£50/month if you use a virtual office instead of your home address.

Business insurance: Employers' liability (legally required if you hire staff) from about £100/year. Public liability from £50/year. Professional indemnity from £100/year.

VAT registration: Free via HMRC. Only mandatory when turnover exceeds £90,000.

Trademark: £170 for one class at the UK Intellectual Property Office. Worth doing once you're confident in your name.

Domain and website: Domain from £10–£20/year. Hosting from £5/month.

A realistic first-year budget for setting up a limited company and doing things properly: roughly £500–£2,000 depending on whether you hire an accountant, use a virtual office, and register a trademark. You could do it for under £200 if you cut everything to the bone.

Sole Trader vs Limited Company: Which Should You Choose?

This is the question I get asked most. Here's the honest answer.

Choose sole trader if: You're testing an idea with minimal financial risk. Your expected profit is under £30,000. You don't plan to hire anyone. You don't need investment. You want the simplest possible setup with the least admin. Registration is free through HMRC and takes ten minutes.

Choose to set up a limited company if: You're building something with growth ambitions. You plan to hire people at any point. You want to raise investment (you can't issue shares as a sole trader). You want your personal assets protected from business debts. Your profits are above £30,000 and you want to optimise your tax position.

The practical difference: A sole trader pays income tax (20–45%) plus National Insurance on all profits. A limited company pays Corporation Tax (19–25%) on profits, and the director pays income tax only on what they draw as salary or dividends. At higher profit levels, the limited company structure is significantly more tax-efficient.

Most founders reading this should set up a limited company. If you're genuinely just testing a side project for a few months with no money at risk, start as a sole trader and convert later if it works out.

Mistakes I've Made Setting Up Limited Companies

I used my home address as the registered office. It went on the public register. I only realised when someone casually mentioned they'd looked up my company and knew where I lived. Switched to a virtual office. Cost me £15/month, which felt annoying until I thought about the alternative.

I forgot to file my confirmation statement. Got a £150 fine. Completely avoidable. I now set calendar reminders three months before every Companies House deadline.

I mixed personal and business spending for the first two months. My accountant's face when I handed over my bank statements was memorable. Open a business bank account in your first week. Not your second month.

I picked a SIC code at random. Minor, but SIC codes matter for some grant applications and industry compliance. Spend two minutes picking the right one.

I didn't get my co-founder to verify their identity in advance. We were ready to register, hit the ID verification requirement, and had to wait three days while they sorted it. Get everyone verified before you sit down to file.

Questions People Ask About Setting Up a Limited Company

How much does it cost to register a limited company in 2026? £100 online. £124 by post. £156 for same-day. These fees changed on 1 February 2026. Formation agents charge extra on top.

How long does it take? Online registration: usually a few hours, sometimes 24 hours. Postal: 8–10 working days. The bottleneck is usually getting everyone's identity verification done, not the Companies House processing.

Can I set up a limited company if I'm not a UK resident? Yes. No nationality restrictions. You need a UK registered office address (a virtual office works) and all directors must complete identity verification. Some banks may want a UK-based director for account opening, but it's not a legal requirement.

Do I need to verify my identity? Yes. Since November 2025, all directors and PSCs must verify through GOV.UK One Login before a company can be incorporated. One-time process. You get a personal code you can reuse for future companies.

Can I register a limited company online? Yes. It's the fastest and cheapest method at £100. Most founders use the Companies House online service directly or go through a formation agent. The process takes about 30 minutes if you have everything ready.

Do I need an accountant to set up a limited company? No. You can register directly through Companies House. But for ongoing Corporation Tax, VAT, payroll, and annual accounts, most founders hire an accountant eventually. Cloud accounting software can reduce this cost.

What's the difference between a limited company and a sole trader? A sole trader is personally liable for all business debts. A limited company is a separate legal entity — your personal assets are protected. Companies pay Corporation Tax; sole traders pay income tax plus NI. Limited companies can issue shares and raise investment; sole traders can't.

Do I need a business bank account for a limited company? Yes. A limited company is a separate legal entity, so its finances must be separate from yours. Most digital banks offer free business accounts you can open the same day your company is registered.

What is a confirmation statement? An annual filing to Companies House (£50 online) confirming your company details are up to date. You must file one every year. Miss it and you get fined automatically.

How do I choose a company name? Check Companies House for availability, search the UK Intellectual Property Office for trademark conflicts, and check domain availability. Avoid restricted words. Buy your domain before you register the company.

James Beresford-Morgan is co-founder of Startup Networks. He has set up multiple limited companies, used both his home address and virtual offices as registered addresses, been fined once for a late confirmation statement, and still can't remember the correct SIC code for what Startup Networks actually does without looking it up.

Going through this process? Talk to founders who've done it in our forum. Once you're registered, check our grants directory for funding that doesn't need repaying.

Last updated: May 2026. Companies House fees verified against the official schedule effective 1 February 2026. Identity verification requirements confirmed against ECCT Act provisions. Tax rates current for 2025/26 and 2026/27.

Edited Fri at 20:142 days by James
Updated for 2026 May