How Much Does It Cost to Set Up a Limited Company in the UK?

How much does it cost to set up a limited company in the UK?

Companies House charges £50 to register a limited company in the UK. Additional setup, compliance and ongoing costs – such as accountancy, confirmation statement, and business tools – vary based on your needs. Many formation agents, such as Company Formations Direct, offer bundled services at a single, affordable price, helping to simplify the setup and reduce overall costs.

Two people reviewing documents and using a calculator to work out the cost to set up a limited company, with money and paperwork on the desk

Key Takeaways

Companies House charges just £50 to process an application to register a UK limited company.
Using a formation agent simplifies the setup and often includes cost-effective additional services, such as business addresses.
Other costs you need to account for are ongoing compliance fees and usual business expenses.

The official costs of registering a limited company in the UK

To register a company, you must submit an application to Companies House, the UK’s registrar of companies. They charge a £50 filing fee for each company they register online. Although the fees used to be lower, they are still among the lowest in the world.

A same-day registration fee of £78 is available for those in a particular rush.

While rare, applications can also be submitted by post, although these take a lot longer to process and are far more likely to be rejected. The fee for paper applications is £71.

Incorporation method

Online filing fee

Postal filing fee

Standard

£50

£74

Same day

£71

Not available

Once the application has been successfully processed, you’ll be issued with a Certificate of Incorporation and a unique company registration number, which confirms your company has been legally registered and is now ready to trade.

Should I use a company formation agent?

Many people, particularly first-time founders, prefer to use a formation agent, such as CFD, to register their company. This is because they’ll do the heavy lifting for the application, providing a streamlined process, dedicated support throughout, and far lower fees when compared to accountants and solicitors.

Additionally, formation agents usually provide a range of other crucial services. This includes banking referrals, registered office address services, director service addresses, and VAT registration.

Ongoing and recurring costs you need to budget for

When people ask, “How much does it cost to set up a limited company?” they often only think about immediate incorporation fees. However, incorporation is only the first stage.

To keep your company compliant, you’ll need to plan for a set of recurring obligations and costs. This means you’ll have some annual renewal costs.

Annual Filing & Legal Requirements

To ensure your company remains compliant, here are the key obligations you need to fulfil each year.

Confirmation Statement
You need to submit a confirmation statement once a year to Companies House. This serves many purposes, including confirming key company details (like your shareholders). Companies House charge a £34 filing fee on submission.

Company Accounts
Your company is required to submit annual accounts to Companies House and HMRC once a year. These show how your company has performed over an accounting period. While submission is free, you’ll normally need an accountant to prepare them for you. Typical annual fees for a newly incorporated company start from around £700 per year (increasing based on the complexity and turnover).

Corporation Tax Returns
Once your company starts trading, you're legally required to submit annual Corporation Tax returns to HMRC. These summarise what Corporation Tax is owed by your company. Submission is free, although, as before, you’ll normally need an accountant to put the yearly returns together. Fees for this range from £400 to £1,200+, again depending on your size.

VAT Registration and Returns
VAT registration with HMRC is mandatory if your annual revenue exceeds £90,000. Registration itself is free, as are the submission of returns. An accountant will likely again be needed for their preparation, with fees ranging from £200 to £450 or more per year.

Pay As You Earn (PAYE)
If you employ staff or pay yourself a salary as a director, you must register for PAYE with HMRC. Registration is free and can be completed online via HMRC. Ongoing payroll management can be handled in-house or outsourced, with accountancy services starting from £30 to £100 per month, depending on the number of employees. Software can also be utilised for submissions to HMRC.

Information Commissioner’s Office (ICO) Registration
If your company processes personal data (which most do), you’ll likely need to register with the ICO and renew each year. The annual fees vary; however, most companies will need to pay between £40 and £60 per year.

Most companies will need to pay for some legal address services, including the following.

Registered Office Address
You need to maintain a registered office address in the UK at all times. This acts as the legal “headquarters” of your company and is published online. Most companies use a registered office address service, which means you don’t have to publish your home address online. It’s also necessary if you don’t have your own UK address. Fees for this service vary depending on the provider, but are typically around £39 plus VAT per year.

Service Address
Each director, secretary, and person with significant control of your company requires a publicly visible service address where legal and government correspondence can be sent. If you wish to keep your home address private, you can purchase a service address. The annual price for this is generally around £26 plus VAT per year.

Other important compliance services

Additional compliance services you may require, depending on your company’s requirements, include:

Business address service (for general business mail): Around £96 per year.

Monthly accounting support (e.g. bookkeeping, advice, etc.): Starting from £50 per month.

Consulting (e.g. legal, tax planning, etc.): Starting from £100-£300 per hour.

Essential business expenses to plan for

Beyond the legal and compliance requirements, there is a range of practical, business-related expenses that founders should consider when determining the cost of setting up a limited company in the UK. These are often needed for day-to-day operations and growth.

As before, many of these are recurring costs, which means they’ll be renewable (e.g. annually).

Operational essentials

These are common initial costs new business owners may incur:

Business bank account – every business should have its own bank account. There are plenty of accounts available, particularly from fintech and challenger banks.

Prices: £5-15 per month.

Domain name registration and website hosting – essential for getting your online presence up and running, particularly if you’re starting an ecommerce company.

Prices: £10-100 per year.

Business email services (e.g., Microsoft 365 or Google Workspace).

Prices: £3-10 per user, per month.

Branding and logo design – costs can vary, and there are now multiple DIY options available, such as using AI or tools like Canva and Adobe Express.

Prices: £0 to over £500.

Tools and software

Digital tools and software can improve efficiency and support business growth:

Accounting software keeps records of your income and expenditure, making the preparation of your accounts and tax returns easier. For example: Xero.

Prices: £10-£30 per month.

Project management tools, CRM systems, invoicing or payment platforms (e.g., Trello, Asana, Stripe): prices vary depending on need and scale.

Consult with your accountant, as they can provide valuable recommendations and offer accountancy software integration to enhance your services.

Insurance

You may need to obtain certain business insurance for your company. The exact insurance you need will differ between businesses. Common insurance includes:

Employers’ liability insurance – covers employee injury and illness at work (a legal requirement if you hire staff).

Professional indemnity insurance – insurance for errors, omissions, or client disputes in your work.

Cyber Insurance – covers data breaches, cyber attacks, and digital business disruptions.

Public liability insurance – covers injury and property damage to third parties.

Check out our exclusive rewards, where you’ll find perks and benefits to help you get set up with many of these services.

Are there any hidden costs in setting up a company?

Not necessarily, but many first-time founders underestimate what they’ll need beyond the initial registration fee. While incorporating a limited company is relatively affordable, additional operational, legal, and financial expenses can add up if you haven’t planned ahead.

Creating a clear and realistic business plan is therefore essential. It provides a comprehensive view of both upfront and ongoing costs, helping you avoid unexpected expenses. For example, essentials like accounting software, branding, insurance, and even professional advice are often overlooked in early budgeting.

Another area that often catches founders out is falling behind on legal obligations. You can receive fines for filing key documents late, such as annual accounts (starting at £150) or tax returns (starting at £100). Additional complications can cost your business time and money.

Working with professionals such as accountants, solicitors, or a formation agent can significantly reduce the risk of costly errors.

So, while there aren’t necessarily hidden costs, poor preparation can turn standard business expenses into unnecessary setbacks. A little expert support goes a long way.

How to start a limited company in the UK

Forming a UK limited company is a straightforward process. With Company Formations Direct, we can have your company set up in just one working day.

All you need to do is provide us with the following using our online form:

Company name – use our name checker to see if yours is available.

Registered office address – your UK legal headquarters. Use our own address to stop your home address from being made publicly available.

Registered email address – where government reminders and notices are sent. This address is kept private.

Details of the activities your business will carry out – do this by selecting 1-4 Standard Industrial Classification (SIC) codes from this list, provided by Companies House.

Details of your directors, even if it’s just you (this includes your name, date of birth, and home address).

Details of your shareholders, even if it’s just you (including your name and how many shares you’ll own).

Details of your people with significant control – the people who ultimately control your company (we’ll help work this out for you).

We’ll handle everything else needed as part of your application, including arranging your company’s articles of association (the rulebook of how your company is to be run).

Your application will then be submitted to Companies House for processing, which usually takes around 24 hours. Once approved, you’ll be issued a Certificate of Incorporation confirming your company has been registered and allowing you to start trading immediately.

Start a company that fits your budget and vision

Setting up a UK limited company is straightforward, and with Companies House’s relatively low application fees, many new founders understandably focus on that initial fee.

However, there are other significant costs to factor in, such as the annual confirmation statement, accounting support, and other compliance services like registered office addresses. In addition to compliance, operational expenses such as business bank accounts, software subscriptions, and insurance can quickly become regular expenses.

That’s why creating a well-thought-out business plan is essential. It helps you account for all the likely costs, startup and ongoing, and ensures your company is financially prepared.

If you're ready to incorporate with peace of mind, you can register your company today with Company Formations Direct from just £59 + VAT per year. Our formation packages include essential features to help you start right and stay compliant from day one.

Will there be annual renewal costs or other costs after registration?

Yes, UK limited companies face both annual renewal and ongoing costs after registration. Required annual fees include £34 for the confirmation statement, as well as services such as registered offices (approximately £39) or ICO registration (typically £40 to £60). Ongoing operational costs may include accounting support, VAT or PAYE filings, insurance, website hosting, and business software. While some tasks can be handled in-house, many organisations choose to outsource them for greater efficiency. Planning for these costs helps ensure long-term compliance and smooth operations.

Does it cost money to set up a limited company in the UK?

Yes, there is a one-time registration fee of £50 when setting up a UK limited company with Companies House. While the incorporation cost itself is low, it is also essential to budget for ongoing compliance and operational expenses, such as setting up a registered office address service, preparing annual accounts, and submitting tax returns.

How much does it cost to set up a dormant company in the UK?

It costs £50 to register a limited company in the UK. Even though the company is dormant, you will still need to file an annual confirmation statement and dormant company accounts. You may also need to use a registered office service address.

Are there tax advantages to using a limited company instead of operating as a sole trader?

Yes, limited companies may offer tax planning opportunities compared to sole trader status, such as taking income through dividends, which can be more tax-efficient depending on your income level. However, this depends on your specific circumstances, so we recommend consulting with a tax advisor or accountant before making a decision.