How to form a UK limited company in 2026: The complete guide

What is a limited company?

A limited company is a legal entity that is separate from the people who own and run it. In the UK, the most common type is a private company limited by shares. This means the company can own assets, enter contracts, and take on debt in its own name. If things go wrong, the shareholders' personal liability is limited to the value of their shares, hence the term "limited."

This structure is used by everyone from solo freelancers to venture-backed startups. It provides credibility, tax efficiency, and legal protection that sole trader status cannot offer.

Why form a limited company?

There are several practical reasons to incorporate rather than operating as a sole trader:

• Limited liability: Your personal assets are protected if the company incurs debts or faces legal action.
• Tax efficiency: Corporation Tax is currently 19-25% depending on profits, which can be more favourable than income tax rates for higher earners. You can also pay yourself through a combination of salary and dividends.
• Credibility: Many clients, especially larger businesses and government contracts, prefer to work with limited companies.
• Investment: If you want to raise funding, you need a company structure with shares to offer investors.
• Separate identity: The company continues to exist independently of its founders, making it easier to bring on partners or eventually sell the business.

What you need before you start

Before filing with Companies House, gather the following:

• Company name: Must be unique and not too similar to existing registered names. Cannot contain sensitive words (like "Royal" or "Authority") without permission. You can check availability on the Companies House name checker or use a platform like Incorra that checks in real time during the formation flow.
• Registered office address: A physical address in England, Wales, Scotland, or Northern Ireland. This will be publicly visible on the Companies House register. Many founders use a registered office service rather than their home address.
• At least one director: Must be a real person aged 16 or over. A company can have multiple directors but needs at least one. Directors have legal duties to the company.
• At least one shareholder: Can be the same person as the director. You need to decide how many shares to issue and at what value. A common starting point is 100 shares at £1 each.
• SIC codes: Standard Industrial Classification codes that describe what your company does. You need at least one. You can find the relevant code on the Companies House SIC code list.
• Articles of Association: The rules governing how the company is run. Most companies use the Model Articles provided by Companies House, which work well for simple structures.

Step-by-step formation process

Step 1: Choose your company name. Check availability through Companies House or a formation platform. Make sure it is not too similar to existing names and does not contain restricted words.

Step 2: Decide on your company structure. Who will be directors? Who will hold shares, and in what proportion? If there are multiple founders, agree on the split before filing.

Step 3: Prepare your details. You will need full names, dates of birth, addresses, and nationality for all directors and shareholders. You will also need your registered office address and service address (where official correspondence goes).

Step 4: Choose your SIC codes. Pick the codes that best describe your business activity. You can select up to four.

Step 5: Submit your application. File online through Companies House directly (costs £50 for standard, £30 for same-day), through a formation agent, or through a platform like Incorra. Online applications are usually processed within 24 hours. Same-day service is processed within a few hours.

Step 6: Receive your Certificate of Incorporation. Once approved, Companies House issues a digital certificate confirming your company number, date of incorporation, and registered details. Your company is now legally formed.

Costs

The actual cost of formation depends on the route you take:

• Companies House direct: £50 for standard online filing, £30 for same-day service
• Formation agents: From £12.99 (plus Companies House fee) for basic packages, rising to £100+ for premium packages with added services
• Platforms like Incorra: Subscription-based pricing that bundles formation with ongoing management tools

The Companies House fee is unavoidable regardless of which route you choose. Everything above that is for the service layer.

Timelines

Standard online formation through Companies House typically takes 24 hours, though it can be faster. Same-day formation is usually processed within 2-6 hours during business days. Paper applications take 8-10 days and are rarely used today.

Most formation agents and platforms, including Incorra, submit applications electronically for the fastest processing.

What to do after incorporation

Formation is just the beginning. Here is what you need to handle in the days and weeks after incorporation:

Register with HMRC: Your company needs to register for Corporation Tax within three months of starting to trade. You may also need to register for VAT (mandatory if turnover exceeds £90,000, optional below that) and PAYE (if you plan to pay employees or directors a salary).

Open a business bank account: You need a separate bank account for business transactions. Options include traditional banks (NatWest, Barclays, HSBC) and digital banks (Tide, Starling, Revolut Business). The process requires your Certificate of Incorporation and director identification.

Set up accounting: You need to keep accurate financial records from day one. Choose accounting software (Xero, QuickBooks, FreeAgent) and consider whether you need an accountant. Platforms like Incorra integrate with these tools and provide AI-powered financial analytics.

Understand your filing obligations: Your company must file a confirmation statement annually (confirming your details are up to date), annual accounts (within 9 months of your accounting reference date), and a Corporation Tax return (within 12 months of your accounting period end). Missing these deadlines results in automatic penalties.

Set up a People with Significant Control (PSC) register: You must identify and record anyone who holds more than 25% of shares or voting rights, or who otherwise exercises significant control over the company.

Common mistakes to avoid

• Using your home address as registered office without realising it is public: Your registered office address appears on the public Companies House register. Use a registered office service if you want privacy.
• Forgetting to register with HMRC: You have three months from the date you start trading, but it is easy to let this slip. Late registration can trigger penalties.
• Not understanding director duties: Directors have legal obligations under the Companies Act 2006, including duties to promote the company's success, avoid conflicts of interest, and exercise reasonable care and skill.
• Ignoring compliance deadlines: Companies House issues automatic fines for late filings. Annual accounts filed late incur penalties starting at £150 and rising to £1,500 for delays over 6 months.
• Mixing personal and business finances: Keep business transactions in your business bank account. Mixing them creates accounting headaches and potential tax issues.

Summary

Forming a UK limited company is a straightforward process that can be completed in under 24 hours. The key is preparation: know your company name, understand your structure, and have your details ready before you start. After incorporation, prioritise HMRC registration, banking, accounting setup, and understanding your ongoing compliance obligations.

Whether you form directly through Companies House, use a traditional formation agent, or choose an AI-powered platform like Incorra, the incorporation itself is the easy part. What matters more is how you manage your company in the months and years that follow.