Limited Company Setup Costs UK 2026: Full Breakdown

Setting up a UK limited company is cheaper than most people expect — but the real cost of running a limited company is the ongoing compliance, not the formation. This guide breaks down both: the upfront limited company setup costs, the optional extras that may or may not be worth paying for, and the ongoing annual costs you should budget for from day one.

Upfront: the minimum cost to form a limited company

You can register a UK limited company yourself directly with Companies House for £50 (2024 increase from the previous £12) for the standard online incorporation. That is the only mandatory cost.

Service	Cost
Companies House online incorporation	£50
Companies House same-day online	£78
Postal incorporation	£71
Software filing (used by agents)	Varies (usually free for the form, agent fee separately)

For the vast majority of new companies, the £50 online route is the right choice.

Using a formation agent

Most people use a formation agent rather than going directly to Companies House. Costs range from around £15 to £100+ depending on the package:

Tier	Typical cost	What’s usually included
Basic	£15 – £25	Online incorporation, digital certificate of incorporation and share certificates, email support
Standard	£40 – £60	Above + registered office address (12 months), printed documents, business bank account introduction
Premium	£75 – £150	Above + service address for directors, mail forwarding, accountancy introductions, VAT/PAYE registration

Note: many agents charge less than the £50 Companies House fee because they make their money on add-ons (registered office, mail handling, accountancy referrals) — read what’s included carefully.

Optional but often worthwhile extras

Registered office address — £30–£200 per year

If you do not want your home address on Companies House public record, pay for a registered office service. From October 2024 the rules tightened — your registered office must be an “appropriate address” where Companies House post can be acknowledged. PO boxes and “care of” addresses are not allowed.

Service address for directors — £20–£60 per year

Directors must also have a service address on the public register. Same logic as registered office — keep your home address private by using a service.

Business bank account — free to £15/month

Most challenger banks (Tide, Starling Business, Mettle, Revolut Business) offer free or low-cost current accounts. High-street banks (Barclays, HSBC, Lloyds, NatWest) typically charge £5–£15/month after an introductory free period.

Accountancy and bookkeeping — £600–£3,000+ per year

A typical “small limited company” accountancy package (one director, simple trading) costs around £70–£150/month for monthly bookkeeping, annual accounts, corporation tax return, payroll for the director and one personal Self Assessment. More complex businesses pay more.

VAT and PAYE registration — free, but takes time

Both are free through HMRC if you do them yourself. Many accountants register on your behalf as part of their setup package.

Total realistic first-year cost

Scenario	First-year cost
DIY company formation, no accountant, free banking	~£50 + your time
Formation via cheap agent, free banking, DIY accounts	~£40
Formation + registered office + entry-level accountant	~£1,200 – £1,500
Formation + registered office + full-service accountant + complex setup	~£2,500 – £4,000

Most genuine new businesses end up in the £1,200 – £2,000 range when accountancy is included.

Ongoing annual costs of a limited company

This is where small business owners get caught out. Forming the company is cheap; running it compliantly is the real cost. Annual costs include:

Mandatory

• Confirmation statement: £34/year (paid to Companies House).
• Annual accounts filing: free filing fee, but accountancy fees if outsourced (most directors should outsource).
• Corporation tax return (CT600): free filing, accountancy fees if outsourced.
• Personal Self Assessment for each director: typically £150–£300/year if outsourced.

Usually needed

• Registered office address service: £30–£200/year if you don’t use your home address.
• Director service address: £20–£60/year (often included with registered office).
• Accounting software (Xero, QuickBooks, FreeAgent): £0 (FreeAgent free with NatWest/Mettle) to £400/year.
• Business bank account: £0–£180/year depending on bank.
• Payroll if you take a salary: included in most accountant packages, or £100–£300/year DIY.

If applicable

• VAT returns: included in most accountant packages above the threshold; otherwise DIY with MTD software.
• Auto-enrolment pensions: if you have any employees, pension contributions and admin.
• Professional insurance: PII, public liability, employers’ liability — sector-dependent.

Total ongoing cost for a typical one-director limited company

Cost item	Typical annual cost
Companies House confirmation statement	£34
Accountancy (monthly retainer)	£840 – £1,800
Registered office	£40 – £100
Software (if not bundled with accountant)	£0 – £400
Bank	£0 – £180
Typical total	£900 – £2,500

This is before VAT (if applicable), insurance and salary/pension costs.

Hidden costs people forget

• Late filing penalties — Companies House late accounts: £150 to £1,500 depending on how late. HMRC late corporation tax: £100, rising. Easy to avoid with a calendar; expensive if missed.
• Director’s loan account interest — taking money out of the company that isn’t salary, dividends or expenses creates a director’s loan, with tax consequences if not repaid within 9 months.
• Personal tax on dividends — dividends are not “free money”: you pay personal tax above the £500 dividend allowance, at 8.75%, 33.75% or 39.35% depending on band.
• Closing the company — striking off costs £33, but a formal liquidation (if there are funds to distribute) is £1,500+. Plan exit before incorporation.

Sole trader vs limited company — does the cost difference matter?

Sole trader setup cost: essentially zero (just register for Self Assessment with HMRC). Ongoing cost: accountancy from £200–£600/year, plus higher personal tax/NIC than dividend-extracting from a company.

Limited company: higher upfront cost (~£40–£100), higher ongoing (£900–£2,500), but potentially significant tax savings above ~£40,000 profit through dividend extraction, and limited personal liability.

Rough rule of thumb: profits below £30,000 favour sole trader on tax-vs-cost; profits above £50,000 typically favour limited company. Between these, it depends on personal circumstances. We do a tailored sole trader vs limited company comparison as part of our company formation service.

Common mistakes when forming a limited company

• Using a home address as registered office when you’d rather not — it’s on the public register forever.
• Buying the cheapest formation package without realising you’ll be upsold add-ons that double the cost.
• Not understanding director duties — including the PSC register, dividend formalities, and director’s loan rules.
• Ignoring the share structure — single share with single shareholder is fine for many, but adding a spouse or business partner mid-life is messier than getting it right at formation.
• Forgetting to deregister for Self Assessment if you previously traded as a sole trader (or vice versa).

FAQ

Can I form a UK limited company myself for £50? Yes. Go to Companies House WebFiling, complete the IN01 form online, pay £50 by card and you typically get the company within 24 hours.

Do I need an accountant from day one? No, but most directors should engage one within the first 3 months. The complexity of corporation tax, dividends, payroll and Self Assessment makes DIY a false economy for most.

What’s the cheapest way to set up a UK limited company? DIY via Companies House for £50. The next cheapest is a basic formation agent at around £20 (they make money on add-ons).

How long does it take to set up a limited company? Online: usually within 24 hours, often within a few hours. Same-day service for £78. Postal: 8–10 working days.

Can a non-UK resident form a UK limited company? Yes. You need a UK registered office address (use a service), and may face KYC checks. Director can be non-resident. A UK shareholder is not required.

Get help with company setup

We help individuals and partners set up limited companies properly — share structure, tax-efficient profit extraction plans, accountancy onboarding and VAT/PAYE registration. We focus on getting it right at formation to avoid expensive restructuring later.

Read more about our limited company setup service, book a free consultation, or read our guides on VAT registration and Making Tax Digital.

For the official rules, see GOV.UK: set up a limited company.