How to Set Up a Limited Company UK | AccountingStack

To form a UK private limited company you submit Form IN01 online to Companies House, with a fee of £50 for standard processing or £78 for same-day. Most companies are incorporated within 24 hours. After incorporation you must register for Corporation Tax with HMRC within three months of starting to trade, open a business bank account, and complete identity verification under the Economic Crime and Corporate Transparency Act 2023.

This guide walks through what to decide before you start, the seven-step formation process, what happens in the first 30 days after incorporation, the all-in 2026 cost, and the most common formation mistakes.

Quick answers

• Step-by-step formation: The seven-step process for incorporating a UK private limited company:
• Cost summary 2026: Total all-in cost to form and operate a basic UK Ltd in year one:
• Key takeaways: Online incorporation costs £50 standard / £78 same-day from 1 May 2024
• Useful resources: Companies House, Set up a limited company

Before you start

Three checks before formation:

Eligibility

Anyone aged 16 or over, not currently disqualified as a director, and not an undischarged bankrupt can form a company in the UK, as there is no UK residency requirement for directors or shareholders. Non-UK founders can also register a limited company online, but each director still needs a director’s service address in the UK for service purposes. There are no nationality or residence requirements for UK incorporation, although banks and ID-verification services may require additional documentation for non-UK residents.

Name check

Search the Companies House register at find-and-update.company-information.service.gov.uk to confirm the name is available. The same-as rule disregards minor punctuation and suffix differences. Sensitive words (Royal, Bank, Charity, Council, etc.) need supporting consent.

ID verification under ECCT 2023

The Economic Crime and Corporate Transparency Act 2023 introduced compulsory identity verification for directors and PSCs. You must verify your identity either direct with Companies House (via the GOV.UK ID Check service) or through an Authorised Corporate Service Provider (an accountant, formation agent, or law firm registered as an ACSP), and online applications may also ask for personal details such as your passport number and national insurance number. Verification is once per individual.

Step-by-step formation

The seven-step process for incorporating a UK private limited company:

1. Choose a name

Run the availability search and sensitive-words check. Add “Limited” or “Ltd” as the suffix (or “Cyfyngedig”/“Cyf” in Wales). Confirm domain availability if you plan to use the name as a brand, as that can strengthen brand identity and business credibility.

Decide who will be the initial director(s) and shareholder(s). Often the same people. A UK company needs at least one director, and company directors are responsible for managing the business and meeting filing duties. A company must also have at least one shareholder, and one person can be both the sole director and sole shareholder.

For a one-person company, 1 ordinary share of £1 nominal is the standard starting point. There is no minimum share capital requirement, so one £1 share is enough to start. This business structure, a private limited shares company, is used by most businesses for commercial trading, and the company becomes a separate legal entity that is legally separate from its owners.

For multi-founder companies, decide how shares split, whether to use single or multiple classes, and whether to add an EMI option pool now or later. The company may have one or multiple shareholders, and business partners often divide ownership through shares and voting rights. Check shareholder details carefully before filing, and remember that People with Significant Control are usually individuals with more than 25% of shares or voting rights. If you create different share classes, record rights clearly, including dividend and decision-making rights. Limited companies protect personal assets and personal finances because shareholders’ liability is limited to what they invest, the company is responsible for its own debts, and it can later raise capital by issuing shares.

4. Confirm the registered office

Every company needs a UK registered office address (separate by jurisdiction in Northern Ireland or Scotland if relevant). It must be an official address and a physical address in the UK where official mail can be received. The registered office is on the public register. Many founders use a formation agent’s service address, a virtual office, or an accountant’s address rather than putting their home on the register, as long as it meets Companies House requirements.

5. Choose SIC code(s)

Pick up to four Standard Industrial Classification codes from the Companies House condensed list. Our SIC codes guide explains how to choose the right SIC code, pick the most accurate match for your main activity. SIC codes are used for statistical reporting and increasingly by banks and lenders for due-diligence checks.

6. Submit Form IN01 online

You can register your company or set up a company online through Companies House WebFiling or a formation agent. The 2026 fees for company registration:

• Standard online: £100

• Same-day online: £78

• Paper (recommended only if online unavailable): £71

Online applications are usually faster than paper submissions when you register a limited company.

The form to form a limited company online gathers everything needed for the company register from steps 1 to 5, plus the memorandum and articles of association (model articles are the default; bespoke articles need to be submitted at incorporation).

7. Receive the certificate of incorporation

Standard processing typically takes a few working hours up to 24 hours. The Certificate of Incorporation confirms your company name, company number, registered office, date of formation, and limited-company status, showing that the business legally exists. From that point your company legally exists.

To compare incorporation against alternatives (sole trader, partnership), see limited company vs sole trader 2026.

Memorandum and articles of association

Two foundational documents:

Memorandum of association

A short statement that the subscribers wish to form a company under Companies Act 2006 and become members. Standard form, signed by the initial subscribers. No bespoke content for most companies.

Articles of association

The internal rule book. Most companies adopt the model articles for private companies limited by shares (set out in the Companies (Model Articles) Regulations 2008), and most businesses can use them without changes. Model articles are well-drafted and adequate for most one-person and small multi-founder companies. Appointing a company secretary is optional for a private limited company and is no longer a legal requirement.

Bespoke articles are needed where you want to:

• Use multiple share classes with different rights

• Modify pre-emption rights or include drag-along/tag-along provisions

• Restrict transfer of shares

• Adjust quorum or voting rules

• Include investor-protection or founder-vesting clauses

Most rounds of external investment require bespoke articles. For early-stage companies, model articles are usually fine and can be replaced later.

After incorporation: first 30 days

Five essential first-month tasks:

Open a business bank account

Apply for a business bank account with Starling, Mettle, Tide, or a high-street bank. Digital banks typically open accounts within 24–72 hours; high-street banks can take longer. Keep business and personal banking strictly separate to help manage the company’s finances and protect personal finances for legal, tax, and accounting purposes.

Register for Corporation Tax with HMRC

Within three months of starting to trade, register the company for Corporation Tax. HMRC issues a 10-digit Unique Taxpayer Reference. Registration is online via the company’s own Government Gateway account.

Register for VAT if expected

If you expect to exceed the £90,000 VAT registration threshold within the next 12 months, register voluntarily early. Voluntary registration can also be advantageous for B2B businesses recovering input VAT.

Register for PAYE if employing

If you will employ anyone (including paying yourself a director salary), register for PAYE up to four weeks before the first payday. Once payroll is running, check whether you can claim Employment Allowance to reduce your employer NI bill. Once payroll is running, check whether you can claim Employment Allowance to reduce your employer NI bill. A limited company can also usually set up employee benefits such as workplace pensions more easily once PAYE is in place, although pension duties depend on your staffing structure, including cases with more than one director and no employees.

Set up bookkeeping software and statutory registers

Choose accounting software (Xero, QuickBooks, FreeAgent, Sage) and plan for statutory registers and ongoing accounting. Set up your statutory registers, directors, members, PSCs, allotments, charges. Most cloud platforms maintain these for you in addition to bookkeeping. Directors are also responsible for accurate records as part of their administrative responsibilities and wider legal requirements for day-to-day business operations. Limited companies must keep accurate financial records, retain them for at least six years, and submit annual accounts to Companies House. HMRC and Companies House both have ongoing filing obligations, including annual accounts and the company tax return where applicable.

Cost summary 2026

Total all-in cost to form and operate a basic UK Ltd in year one:

Common formation mistakes

Five frequent issues:

• Wrong SIC code. Picking a generic catch-all code (74990 “Non-trading company”) instead of the activity-specific code. Banks and lenders sometimes refuse accounts to companies with vague SIC.

• No PSC declared. Persons of Significant Control must be identified and recorded at incorporation. Missing PSC information delays processing.

• Residential address as registered office. Putting your home address on the public register. Use a formation agent’s service address or another business location.

• Wrong share structure. Single £1 share when you need flexibility for future investors or partners. Easier to set up a flexible structure now than restructure later.

• Mixing personal and business finances. Operating without separate business banking. Causes accounting confusion and can pierce the corporate veil in extreme cases.

Whether a limited company depends on your goals, income, growth plans, and admin capacity, but the tax benefits can be meaningful in some cases. For example, at around £60,000 profit, a limited company may save approximately £4,500 in tax compared with sole trader status, subject to current rules and personal circumstances, so get professional advice before changing structure.

Key takeaways

• Online incorporation costs £50 standard / £78 same-day from 1 May 2024

• Most companies are incorporated within 24 hours

• ID verification under ECCT 2023 is compulsory for directors and PSCs

• Register for Corporation Tax within three months of starting to trade

• Year-one all-in cost typically £850–£2,200 for a basic Ltd

• Use model articles unless you need bespoke share classes or investor terms

Frequently asked questions

How much does it cost to form a limited company? £50 for standard online incorporation, £78 for same-day, and £71 for paper, from 1 May 2024 and continuing through 2026. Formation-agent service fees on top vary widely.

How long does it take to form a UK limited company? Standard online processing typically takes a few working hours, up to 24 hours. Same-day processing is available at a premium fee.

Do I need an accountant to form a company? No. Most one-person companies are formed direct on Companies House WebFiling or through a low-cost formation agent. A company secretary is optional, but an accountant can help with company registration, tax returns, annual accounts, and ongoing accounting after formation.

Can I be the sole director and sole shareholder? Yes. A UK private limited company needs only one director (a human aged 16+) and one shareholder. The same person can be both.

What if I’m setting up a limited on my own? One person can be both the sole director and sole shareholder, but every company must still have at least one director and at least one shareholder.

What type of company do most founders choose? Most founders form a shares company for a profit-making business, while non profit organisations often use a company limited by guarantee.

When do I need to register for VAT? When VAT-able turnover exceeds the registration threshold (£90,000, verify the current figure). You can register voluntarily below the threshold, which may be beneficial for B2B businesses.

(Companies House fees changed on 1 February 2026, verify current confirmation statement and other ongoing fees before quoting.)

Useful resources

Companies House, Set up a limited company https://www.gov.uk/limited-company-formation

Companies House, WebFiling https://ewf.companieshouse.gov.uk/

GOV.UK, Register for Corporation Tax https://www.gov.uk/register-for-corporation-tax