How to Set Up a Limited Company in the UK (Beginner’s Guide)

If you are ready to move beyond “just an idea” and start a proper business, learning how to set up a limited company in the UK is a big step. This beginner’s guide walks through the process in plain English, explains the key legal requirements, and highlights where professional advice can save you time, taxes, and stress.


At 10CA, we help clients at every stage of their business journey, from the first Companies House registration to annual accounts, company tax returns and long-term planning. What follows is a clear, step-by-step guide, but it is not a substitute for tailored advice on your specific circumstances.


1. Decide if a limited company is right for you

Before you look at forms and SIC codes, you need to decide whether a limited company is the right business structure.


A private limited company is a separate legal entity. It can own assets, sign contracts, employ staff and incur company debts in its name. As a shareholder, you benefit from limited liability, which broadly means you are not personally responsible for the company’s debts beyond the value of your shares, provided you have not given personal guarantees or behaved improperly. By contrast, a sole trader has unlimited liability and is personally responsible for business debts.


Limited companies can be more tax efficient in some situations, especially once profits rise above a certain level, but they also bring more paperwork, more formal record-keeping and clearer legal responsibilities for each company director. There is no single “best” structure; it depends on your income, risk level, plans and personal finances.


If you are not sure whether to remain a sole trader or incorporate, it is sensible to take professional advice before you commit.


2. Choose a company name and check if it is available

Every limited company needs a unique company name. The name must not be too similar to an existing company on the Companies House register, and, unless you use an approved exemption, it must end in “Limited” or “Ltd.” Companies House also restricts certain sensitive words and expressions, for example, anything implying a connection with government, public bodies, or regulated professions, unless you have permission.


You can search existing names using the Companies House online service before you submit anything. If you are trading under a particular brand, you should also consider whether a matching domain name is available and whether you need to protect the brand through a trademark.


For most small businesses, there is no need to think about becoming a public limited company at this stage. You will be registering a private limited company limited by shares.


3. Decide on directors, shareholders and business structure

To register, you need at least one director and at least one shareholder; these can be the same person, so it is possible to be the only director and sole shareholder. There is no legal requirement for a company secretary in most small private companies, though some businesses still choose to appoint one to help with administrative responsibilities.


Directors are legally responsible for running the company and making sure it meets its legal obligations, including Companies House filings and tax. Shareholders own the company. Even if you are currently the sole employee, you must be clear which hat you are wearing at any given time: director, shareholder or employee.


When you set up, you will decide how many shares to issue, what nominal value they will have and who holds them. This matters later when you take profits out of the company, because dividends are paid to shareholders according to shareholdings, and salary is paid to employees through PAYE with National Insurance. Recent UK tax changes have increased dividend tax rates by two percentage points from April 2026, so optimal planning around salary and dividends is increasingly important.


If you are setting up with co-founders or family members, it is wise to document arrangements properly in a shareholders’ agreement as well as the basic incorporation documents.


4. Choose your registered office address and SIC code

Every limited company must have a registered office address. This is the official address where Companies House and HMRC send legal documents. It must be a real physical address in the same country in which the company is registered, not just a PO box. For example, a company registered in England and Wales must have its registered office in England or Wales.


You can use your home address, but remember it will appear on the public register. Many owners prefer to use their accountant’s address or a formation agent’s registered office service for privacy.


When you register, you must also provide at least one Standard Industrial Classification (SIC) code that describes your main business activities. Companies House uses a condensed list of SIC codes are based on the official UK Standard Industrial Classification. You can look these up online and choose the closest match; you can update the codes later if your business activities change.


5. Gather the information you need to register

To register with Companies House, you will need personal details for each director and shareholder. This normally includes full name, date of birth, nationality, occupation, home address, a service address (which can be different from your home address), and identification details such as a passport number or other ID for anti-fraud checks.


You will also confirm your share structure, your chosen accounting reference date and your articles of association. You can use the model articles provided by Companies House or adopt bespoke articles if you have more complex needs. These documents are legal documents that govern how the company operates.


From 2024 onwards, changes under the Economic Crime and Corporate Transparency Act mean that Companies House has greater powers to query and reject suspicious information and will gradually require identity verification for directors and persons with significant control. Identity checks are being phased in and are expected to become compulsory by 2026, so it is worth understanding this process early.


6. Register your company with Companies House

You can register a new company online directly with Companies House or through a company formation agent. Online registration is usually the quickest and most cost-effective way to set up. Postal applications are still possible but take longer and cost more.


Using a formation agent can be helpful if you want additional services such as a registered office address, help with SIC codes, or pre-completed legal document templates. Whether you go directly or via an agent, the core information is largely the same.


Once Companies House accepts your application, your company legally exists. You will receive a certificate of incorporation with your company number. At that point you have a separate legal entity, distinct from you personally, with its own legal obligations.


7. Register for Corporation Tax and understand your tax position

As soon as the company starts trading, you must tell HMRC that the company is active for corporation tax. The usual rule is that you must register within three months of starting to trade, which includes making sales, advertising, employing someone or taking other commercial steps.


For the financial year 2025, corporation tax is charged at a main rate of 25 per cent on profits above £250,000 and a small profits rate of 19 per cent on profits of £50,000 or less. Profits between those limits benefit from marginal relief, which gradually increases the effective rate. These rates are confirmed in recent Finance Act provisions and are scheduled to remain in place for 2025–26.


You will normally:

  • Prepare annual accounts for the company
  • Submit a company tax return to HMRC
  • Pay Corporation Tax due on time

This is separate from your own income tax position as a director or shareholder. You may still need to file a self-assessment tax return for salary, dividends or other income, and you will need a National Insurance number to deal with HMRC in your personal capacity.


8. Open a business bank account and separate your finances

Although it is not strictly illegal to use a personal bank account, in practice, a limited company should always have its own business bank account. The company is a separate legal entity, and its business finances should be kept separate from your personal finances.


A dedicated business account makes it much easier to manage record keeping, track tax, monitor cash flow and demonstrate that you are treating the company properly as a separate legal entity. Many banks will ask for your certificate of incorporation, company number, details of directors and shareholders, and ID such as a passport.


If you use accounting software, linking it to your business account can save a lot of administrative time and help you keep on top of your responsibilities throughout the year.


9. Learn your ongoing legal responsibilities

Setting up a limited company is only the beginning. Running one brings continuing legal responsibilities. Key points include:


You must file annual accounts with Companies House. These show the company’s financial position and must comply with UK accounting and filing rules.


You must file at least one confirmation statement every 12 months, confirming that core company information such as the registered office address, directors, shareholders and SIC codes is up to date. Recent changes mean that companies must provide a registered email address and, in most cases, a full list of shareholders the first time they file a confirmation statement under the new rules.


You must keep statutory registers and adequate records of income, expenses, assets, liabilities and decisions. Good record keeping is not just best practice; it is part of your legal obligations as a director.


You must comply with other regulatory requirements relevant to your business activities, for example, VAT registration if your turnover exceeds the threshold, PAYE registration if you have employees, and any industry-specific licences.


If you fail to meet filing deadlines or pay tax, penalties can apply and, in serious cases, directors can face personal consequences. Limited liability does not protect you from sanctions if you ignore your legal responsibilities.


10. When to use a company formation agent or accountant

You can handle the basics of setting up a limited company yourself, but there are times when bringing in professional advice is a better option, especially if:

  • you expect rapid growth or complex profit extraction
  • you have multiple directors or shareholders
  • you are investing significant personal funds and want to manage risk and tax efficiently

An accountant or specialist formation agent can guide you through choices such as share structure, director remuneration, use of a home address versus a professional registered office, and how to balance salary and dividends in light of current tax rules.


They can also help you plan your first year so that annual accounts, company tax returns and confirmation statements are straightforward rather than rushed.


At 10CA we often see clients after they have already formed a company but without a clear plan for tax, record keeping or regulatory requirements. In most cases, it is more efficient to get things right at the beginning than to fix avoidable problems later.


Final thoughts

Setting up a limited company in the UK is more than filling in a form. You are creating a separate legal entity with its own rights, responsibilities and tax profile. Done well, it can be a tax-efficient, professional structure that protects your personal position and supports your long-term business journey. Done casually, it can lead to unnecessary cost, confusion and potential legal issues.


If you would like help choosing the right structure, registering with Companies House, understanding corporation tax, or setting up robust accounting and record keeping from day one, the team at 10CA is ready to support you with clear, practical advice.


Disclaimer

This blog is a general beginner’s guide to how to set up a limited company in the UK. It is based on information from Companies House and recent Finance Act updates available at the time of writing. It does not constitute legal, tax or financial advice.


Laws, tax rates and regulatory requirements change, and their impact depends on your personal circumstances. Before making decisions or relying on any information in this guide, you should seek professional advice tailored to your situation and check the latest official guidance on and with Companies House and HMRC or with your accountant.

Company tax returns and accounts have gone digital

By Charlie Flockhart • April 21, 2026
HMRC and Companies House have confirmed that from 1 April, all businesses must use compliant, commercial software to file their company’s tax returns. As of 31 March, the free joint online service, commonly known as the CATO portal, from these two Government bodies has been removed and you must now use software to file company tax returns to HMRC. For the time being, you will still be able to file annual accounts at Companies House using third-party software, WebFiling services or paper filing. The decision has been made to end this service as it is “outdated and no longer aligns with modern digital standards”, according to Companies House. This change is in line with the introduction of the Economic Crime and Corporate Transparency Act, which implemented “enhanced corporation tax requirements and changes to UK company law.” It also follows on from a major IT security breach at Companies House, identified in March 2026, that exposed the WebFiling system and allowed some users to potentially access and amend the details of other companies. Although the breach has now been resolved and security strengthened, it has raised concerns about the reliability of GOV.UK One Login service.  Can you still amend previous returns using the free service? HMRC and Companies House have confirmed that now that the free filing service has closed, company directors will have to use commercial tax software if they need to make changes to a previously submitted Corporation Tax return or refile a rejected return. From now onwards, any previously filed financial information will no longer be available in the system, as it has not been retained and will need to be entered again. HMRC has said that, for amendments, it will also be acceptable to send a paper return to the Corporation Tax Services office. If you have previously filed financial accounts with Companies House and you want to make changes or corrections, this will also need to be done via commercial software or by sending paper accounts to Companies House via post. Are there any exceptions to this new rule? Companies can file a paper Corporation Tax return only in limited circumstances, such as if they wish to submit it in Welsh or can demonstrate a valid, reasonable excuse to HMRC. Otherwise, returns must be filed online using commercial software. If you are affected by this change and need help choosing and utilising commercial software to complete your Corporation Tax return, please speak to our team.

Capital allowances - New rules for a new tax year

By Charlie Flockhart • April 21, 2026
Capital allowances continue to provide an effective method for businesses to reduce their tax bills, by providing incentives for investment in eligible expenditure – typically plant and machinery. Historically, these reliefs have been subject to change and the 2026/27 tax year is no different, as the Government moves to alter two key reliefs – Writing Down Allowance (WDA) and a new First-Year Allowance (FYA).  Reduction of the Writing Down Allowance The WDA will be reduced from 18 per cent to 14 per cent on the main pool of qualifying plant and machinery assets. This change has been introduced on two different dates, starting with companies subject to Corporation Tax on 1 April and followed shortly thereafter by those subject to Income Tax, such as sole traders and partnerships, from 6 April. Businesses with large brought forward main pool expenditures are expected to lose the most from the reduction in the main rate of WDA. In the long-term, the change may also reduce incentives for investment in second-hand assets and cars, which benefited under the previous rules. The new First-Year Allowance To offset some of the impact of the reduction in WDA, a new 40 per cent FYA on main rate expenditure, primarily still covering plant and machinery, will now be available. This new FYA is intended to encourage investment in areas where other FYAs don’t allow, in particular, assets bought by unincorporated businesses and leases. Sole traders and partnerships will, for the first time, be able to get additional support at the point of investment, which means that more businesses will be able to reduce their tax bill in the same year as their investment. This is expected to give a quick cashflow boost to those affected and provide additional support for future investments. However, it is important to note that this FYA does not support investment in second-hand assets, cars or leased assets in other countries. Finally, the Government has also confirmed that small business owners will continue to benefit from tax relief on electric vehicles, as the 100 per cent FYA for zero-emission vehicles and charge points has been extended until 31 March 2027 for Corporation Tax and 5 April 2027 for Income Tax. This gives businesses greater certainty when planning ahead, while also providing a strong financial incentive to invest by reducing tax bills upfront. Want to make more of capital allowances? If you think you may be eligible for capital allowances, either due to the changes outlined in this article or more generally, then it is important that you claim the tax relief available to you. If you would like help reviewing the current capital allowances that your business can claim, please get in touch.

Government abolishes work-from-home relief

By Charlie Flockhart • April 21, 2026
Directors and employees claiming work-from-home tax relief will no longer be able to claim it from the start of the new tax year – 6 April 2026. Why is this relief being taken away? The Chancellor announced the removal of the work-from-home relief as part of her latest Autumn Budget. The main reasoning given for the abolition is that it will support the nation’s deficit reduction. HMRC has also said that it no longer believes it is fit for purpose or easy to police. Who could claim work-from-home relief? Work-from-home relief has been utilised by homeworkers since the early 2000s, helping them offset some of the costs of heating, lighting, broadband and other home-office expenses required to complete their jobs. The relief allowed employees and directors to claim a flat rate of £6 per week or a deduction for actual costs. However, those who do not claim the flat fee were required to provide evidence of the exact costs, such as an invoice or bill. Eligibility for the relief only applied to individuals who had no other choice but to work from home. For instance, where the business did not have an office or the daily commute was not feasible. Individuals who simply preferred to work from home did not qualify. Is there any relief still available for home workers? The only remaining tax-free support will be reimbursements made directly by employers. This applies only where the payments relate to demonstrated additional household costs and where the costs are incurred wholly, exclusively and necessarily for employment duties. For anyone still claiming work-from-home relief, it is worth reviewing your position now to understand how this abolishment will impact your take-home pay.