Setting up a limited company in the UK costs £100 to register online, but the fee is the easy part. The harder decisions are whether a company suits you better than trading as a sole trader, who the directors and owners will be, and how to deal with the identity checks that are now compulsory. This guide covers the costs, the steps, and what you must do once the company exists.
Limited company or sole trader
| Limited company | Sole trader | |
|---|---|---|
| Legal status | A separate legal entity from you | You and the business are the same person |
| Liability | The company is liable for its debts, and your personal liability is generally limited | You are personally liable for the business's debts |
| Tax | The company pays Corporation Tax on its profits, at rates from 19% to 25% depending on profit | You pay Income Tax and National Insurance on your profits |
| Admin | Annual accounts, a confirmation statement and a company tax return | A Self Assessment return |
| Privacy | Directors' details appear on a public register | No public register |
Limited liability is not a shield for everything. Lenders and landlords often ask directors for personal guarantees, and directors can still be personally responsible for their own wrongdoing.
What it costs
| Item | Fee |
|---|---|
| Register a company online | £100 |
| Same-day online service | £156 |
| Register on paper | £124 |
| Annual confirmation statement, online | £50 |
| Change of company name, online | £20 |
These fees rose on 1 February 2026, so any guide still quoting £50 is out of date. Company formation agents bundle the Companies House fee with extras such as a registered office address, filing services and accounting. You can register directly with Companies House yourself, so compare what a package adds with what you actually need.
The steps
- Choose a name and check it is available on the Companies House register. It is also worth checking it against existing trade marks.
- Decide who the directors and shareholders are, and how the shares will be split.
- Provide a registered office address. It must be an address where official post can be delivered and it appears on the public register. Many people use their accountant or a formation agent's address to keep their home address off the register.
- Choose a SIC code that describes your main activity.
- Verify the identity of each director and person with significant control. See the section below.
- Give a registered email address. It is now mandatory, but it is not shown publicly.
- File the application, and pay the fee.
- After incorporation, register the company for Corporation Tax with HMRC within three months of starting business activity.
Director identity verification
Identity verification became mandatory for new directors and people with significant control on 18 November 2025. Existing directors and people with significant control have a transition period of about a year, so the deadline is close, and you should check the GOV.UK guidance for your company's exact timing. Verification is generally done online with a photo ID such as a passport or driving licence, or through an authorised agent such as an accountant.
What you must do every year
- File a confirmation statement with Companies House (£50 online)
- File annual accounts with Companies House, normally within nine months of the company's year end
- File a Company Tax Return with HMRC, normally within 12 months of the year end, and pay any Corporation Tax within nine months and one day
- Keep your register of people with significant control up to date
- Keep proper records, including a record of anything you borrow from or lend to the company
Next steps
Open a separate account for the company; our guide to the business bank account for a limited company or sole trader explains what to compare. If you will hire anyone, read our guide to business insurance, because employers' liability cover becomes compulsory with your first employee. For bookkeeping and payroll, see small business accounting software with payroll.