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

How much does it cost to start a limited company in the UK? Just £12 if you do it yourself directly with Companies House — though most people pay £30-£100 through a formation agent for the convenience and extras. It’s one of the cheapest business setups in the world, and the whole thing can be done online in a day.

It’s one of those questions that sounds simple until you start digging. Ask three people and you’ll get four different answers — usually because everyone’s situation is slightly different. I’ve pulled together the practical detail below so you can make a decision without spending your whole weekend on comparison sites. If that’s on your mind too, have a look at our guide to what is the difference between a sole trader and a limited company — it pairs naturally with everything below.

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

The official fee is £12 for digital incorporation direct at Companies House (or £71 by post, but nobody should do that). That’s it — that’s the legal cost of creating a limited company. You’ll need a company name, a registered office address in the UK, at least one director, and details of shares and shareholders.

Formation agents (1st Formations, Rapid Formations, Quality Company Formations) charge £30-£100 for packages including the £12 fee plus extras: printed certificates, VAT/PAYE registration help, registered office address services, and template documents. The basic £30 packages are fine for most — you’re paying for convenience and hand-holding, not anything legally required.

Now for the part most guides skip: the practical trade-offs. Worth a read alongside this: our guide to what are the cheapest ways to market a small business in the uk.

The real startup costs beyond the £12

The key points, stripped of fluff:

• Registered office address: free if you use your home; £30-£100/year for a service address if you want privacy.
• Business bank account: many are free (Starling, Monzo, Tide); high-street accounts may charge £5-£10/month after free periods.
• Accounting software: £10-£30/month (FreeAgent, Xero, QuickBooks) — FreeAgent is free with some bank accounts.
• Accountant: £600-£1,500/year for a small limited company — worth it from day one, honestly.
• Insurance: £100-£300/year for basic professional indemnity/public liability.
• Domain and website: £10-£50 for the domain; website costs vary wildly.

One thing I’ve noticed over the years: the people who are happiest with their choice are the ones who matched it to how they actually live, not to some idealised version of their habits. Be honest with yourself here and you’ll choose better.

Sole trader vs limited: the cost question behind the question

Most people asking about incorporation costs are really asking whether it’s worth it — and the answer is usually about tax and credibility, not the £12 fee. Limited companies pay 19-25% corporation tax versus income tax rates up to 45% for sole traders, so once profits pass roughly £30,000-£40,000, the limited structure typically saves real money.

But limited companies bring admin: annual accounts, confirmation statements (£34/year filing fee), corporation tax returns, and stricter record-keeping. For side hustles earning under £15,000, sole trader is simpler and cheaper overall. Don’t incorporate just because it sounds professional — incorporate when the tax maths or liability protection justifies the paperwork.

How to incorporate in a day

Do it in this sequence and you won’t miss anything important:

1. Choose a company name and check it’s available at Companies House.
2. Decide your share structure (100 £1 shares to yourself is the standard simple setup).
3. Prepare your registered office address and director details (name, address, date of birth, nationality).
4. File online at Companies House (£12) or via a formation agent.
5. Wait for the certificate of incorporation — usually within 24 hours.
6. Register for corporation tax with HMRC (automatic in most cases, but confirm).
7. Open a business bank account and set up accounting software before money moves.

Quick answers

Is the cheapest starting a limited company option ever the right choice?

Sometimes — but rarely for the reasons people think. The cheapest starting a limited company option works fine when your needs are simple and the product is basically a commodity. It falls apart when reliability, support or longevity matter. Ask yourself one question: what’s the cost if this goes wrong? If the answer is ‘a bad afternoon’, go cheap and cheerful. If it’s ‘hundreds of pounds or weeks of hassle’, pay the middle price and sleep well.

How long does sorting out starting a limited company usually take?

Less time than you’re probably imagining. The research takes an evening, the decision takes a day of mulling over, and the actual doing is usually under two hours. What stretches it into weeks is dithering — half-decided, tab-hoarding limbo. Pick a deadline, gather the facts from this guide, make the call, and move on. Done beats perfect here, every single time.

How much should I realistically budget for starting a limited company?

More than the headline price, less than the premium option. A sensible budget for starting a limited company sits in the middle of the market — enough to avoid the cut corners of the cheapest tier, without paying for features you’ll never touch. Add 15-20% contingency for the extras nobody mentions upfront, and you’ll land about right. The people who blow the budget are the ones who budgeted for the advert price instead of the real one.

Pro tip: when you’re comparing starting a limited company options, ignore the headline claims and read the worst-case reviews instead. How a company handles problems tells you far more than any advert — and it’s the problems you’ll remember, not the smooth months.

The bottom line

£12 DIY, £30-£100 via an agent — incorporation is cheap. The real costs are the accountant, software and insurance that follow. Incorporate when profits or liability justify it, not before.

That’s the full picture as it stands. Markets move and deals change, but the principles above hold — match the choice to your real needs, read the small print, and don’t pay for things you won’t use. And do me a favour — once you’ve decided, tell a friend. Half the country is overpaying for starting a limited company simply because nobody talks about it. For the official word, see Companies House: set up a limited company. GOV.UK: running a limited company is also worth a look for independent comparisons.