How to set up a company in the UK (2026): steps, tax & cost

Overview

The UK private limited company — a 'Ltd' — is one of the easiest and cheapest formal companies in the world to register. You do it online through Companies House, the government registrar, for a £50 filing fee (rising to £100 from 1 February 2026), and most applications are approved inside 24 hours. There is no minimum capital in any meaningful sense: you can incorporate with a single £1 share. A non-resident can be the only director and the only shareholder, and never set foot in the country.

None of that makes a UK Ltd a tax shelter, and it is important to be honest about why. Britain is a high-tax, high-transparency country: corporation tax runs to 25%, the company files public accounts, and the names of directors and beneficial owners sit in a free, searchable register. A UK Ltd is an excellent way to run a real, credible, bankable business — not a way to hide money. If you actually run the company from another country, that country will usually want to tax it too.

Who it's for

A UK Ltd suits people who want a reputable, well-understood European company with cheap admin and access to UK and international clients, banks and payment processors. It is a poor fit for anyone chasing secrecy or a genuinely low tax bill — the register is public and the tax rate is not low.

• Founders selling to UK or EU customers who want a recognised local entity and a UK business bank or fintech account.
• Freelancers and consultants who have outgrown sole-trader status and want limited liability and a clean corporate wrapper.
• E-commerce and SaaS sellers who need a trusted jurisdiction that Stripe, PayPal, Amazon and Apple all accept without friction.
• Non-residents who want a straightforward holding or trading company in a common-law, English-language system.
• Not for you if you want anonymity, near-zero tax, or a 'paper' company you run from elsewhere and expect not to be taxed on.

Types of company

Nearly everyone forming a company in the UK uses the private company limited by shares — the 'Ltd'. The other structures exist for specific reasons, but the Ltd is the default for trading and holding businesses.

Corporate tax & key taxes

The UK taxes company profits on a tiered corporation-tax scale, not a single flat rate. Figures below are for the financial year to 31 March 2026; always verify the current figure with HMRC before you rely on it.

How to set it up, step by step

1. Choose a company name that is available and not too similar to an existing name — check it against the Companies House register first.
2. Line up the roles: at least one director (a real person, 16+), at least one shareholder (can be the same person), and identify any Person with Significant Control (PSC) — anyone owning or controlling over 25%.
3. Get a UK registered office address (this is public); a non-resident director can use a separate service address, which can be overseas.
4. Complete Companies House identity verification for every director and PSC — free via GOV.UK One Login, or through an Authorised Corporate Service Provider (ACSP). This has been mandatory for new appointments since 18 November 2025.
5. Prepare the memorandum and articles of association (the standard 'model articles' are fine for most companies) and decide your share structure.
6. File the incorporation (IN01) online at Companies House and pay the fee — £50 now, £100 from 1 February 2026. Approval is usually within 24 hours.
7. Register for Corporation Tax with HMRC within three months of starting to trade, and register for VAT if you are over — or expect to exceed — the £90,000 threshold.
8. Open a business bank or fintech account and set up bookkeeping; annual accounts and a confirmation statement are due to Companies House, and a Company Tax Return to HMRC, every year.

Costs & timeline

Substance, banking & the reality

Registering a UK company is easy; the honest constraints come afterwards. First, the register is public and free to search — your name, month and year of birth, service address, shareholding and beneficial ownership are all visible, and under the Economic Crime and Corporate Transparency Act the transparency rules and ID checks have only tightened. Second, the UK bank account is the hard part: mainstream banks are wary of non-resident-owned companies with no local presence, so many founders start with a fintech (Wise, Revolut Business, Airwallex and similar) and verify identity and business activity carefully. Third — and most important — where the company is run matters more than where it is registered.

Common mistakes

• Assuming a UK Ltd is 'offshore' or private — it is neither. The register is public and the company files accounts.
• Treating 19% as your rate. The small-profits rate only covers profits up to £50,000; above that you slide toward 25%, and the £50k/£250k thresholds are split across associated companies.
• Forgetting ID verification. Since 18 November 2025 every director and PSC must verify their identity with Companies House; existing directors are being pulled in through the confirmation-statement cycle to November 2026.
• Missing the VAT threshold. You must register once taxable turnover passes £90,000 in any rolling 12-month period — not just at year-end.
• Ignoring CFC and management-and-control rules in your country of residence, then getting a surprise tax bill at home.
• Missing filing deadlines. Late accounts, confirmation statements or tax returns trigger automatic penalties and can lead to the company being struck off.