How to Set Up a Limited Company in the UK — Complete Guide

Setting up a limited company in the UK takes about 15 minutes online and costs £50. But there are decisions to make before you register, and steps to take afterwards. This guide covers the whole process.

Should you set up a limited company?

A limited company is a separate legal entity from you personally. The main benefits:

• Limited liability — your personal assets are protected if the company gets into debt
• Tax efficiency — companies pay Corporation Tax (currently 19-25%) rather than income tax, and you can take dividends
• Professional credibility — many clients and suppliers prefer working with limited companies
• Company name protection — no one else can register your company name

The main drawbacks:

• Admin obligations — annual accounts, confirmation statements, tax returns
• Public record — your accounts, directors, and registered address are publicly visible
• Accountancy costs — most limited companies use an accountant (£500-2,000/year)

If you're earning under £30,000-40,000 as a sole trader, the tax savings may not justify the admin. Above that, most people benefit from incorporating.

What you need before registering

Before you start the registration process, decide on:

1. Company name

• Must be unique — check the Companies House register
• Cannot be offensive or suggest a connection to the government
• Cannot be the same as or too similar to an existing company
• Must end with "Limited" or "Ltd" (or Welsh equivalents)

2. Registered office address

• Must be in England & Wales, Scotland, or Northern Ireland (matching where you register)
• Must be a physical address (not a PO Box)
• Will be publicly visible on the Companies House register

3. Directors

• You need at least one director who is a natural person (not a company)
• Must be aged 16 or over
• Need their full name, date of birth, nationality, occupation, and two addresses (service + residential)

4. Shareholders and shares

• At least one shareholder (can be the same person as the director)
• Decide how many shares to issue and at what value
• Most people start with 1 share at £1, or 100 shares at £1 each

5. SIC code

• A five-digit code describing what your company does
• You can have up to four codes

6. Articles of association

• The rules governing how your company operates
• Most companies use the standard Model Articles — no need to draft custom ones

How to register online

The fastest route is through the Companies House online registration service:

1. Go to the Companies House incorporation service
2. Create an account if you don't have one
3. Choose your company type — private limited by shares is the most common
4. Enter your company name — the system checks availability instantly
5. Enter your registered office address
6. Add director details — name, date of birth, address, nationality, occupation
7. Add shareholder details — who owns shares and how many
8. Add PSC details — person(s) with significant control (usually the majority shareholder)
9. Choose your SIC code
10. Select articles of association — Model Articles for most companies
11. Pay £50 by card — the standard online fee
12. Submit — your company is usually registered within 24 hours

You'll receive a certificate of incorporation by email and your company will appear on the Companies House register.

What does it cost?

| Method | Fee | Processing time | |--------|-----|-----------------| | Online (standard) | £50 | Usually same day or next day | | Online (same-day) | £78 | Guaranteed same day if filed before 3pm | | Paper (form IN01) | £71 | 5-10 working days |

Most people use the standard online service. There's no benefit to paper filing.

Formation agents

You can also use a company formation agent, which typically costs £15-50 on top of the Companies House fee. They handle the paperwork and often include extras like:

• A registered office address for the first year
• Standard articles of association
• First board minutes and share certificates
• A digital company pack

Formation agents can be faster and more convenient, especially if you're setting up multiple companies or need non-standard articles.

What to do after incorporation

Once your company is registered, you need to:

Within the first few weeks:

• Open a business bank account — you'll need your certificate of incorporation
• Register for Corporation Tax with HMRC — you must do this within 3 months of starting to trade
• Register for VAT if you expect turnover to exceed £90,000 (2024/25 threshold)
• Set up PAYE if you're paying yourself a salary or hiring employees
• Get business insurance if required for your industry

Ongoing obligations:

• File annual accounts with Companies House — due 9 months after your financial year end
• File a confirmation statement — due every 12 months, costs £34
• File a Corporation Tax return (CT600) with HMRC — due 12 months after your accounting period end
• Pay Corporation Tax — due 9 months and 1 day after your accounting period end
• Keep accounting records — you're legally required to maintain proper books

Set up your company infrastructure:

• Accounting software — Xero, FreeAgent, or QuickBooks
• Find an accountant — especially for your first year's accounts and tax return
• Set up a company email — not essential but more professional than Gmail

Common mistakes when setting up

Using your home address as registered office — it'll be on the public register forever (even after you change it). Consider a virtual office from the start.

Issuing only 1 share — makes it harder to bring on partners later. Issuing 100 shares at £1 each gives you more flexibility.

Not registering for Corporation Tax — HMRC won't chase you immediately, but you'll face penalties eventually. Do it within 3 months of trading.

Choosing a company name that's too similar — Companies House might accept it, but the existing company can object and force you to change it.

Key takeaways

• Registration costs £50 online and takes about 15 minutes
• You need a company name, registered address, at least one director, and at least one shareholder
• Most companies use Model Articles — no need for custom articles
• After incorporation: open a bank account, register for Corporation Tax, and set up accounting
• Your company must file annual accounts and a confirmation statement every year
• Consider using a virtual office as your registered address to keep your home address private