How to Set Up a Limited Company in the UK: 2026 Steps

Quick answer: To set up a limited company in the UK in 2026, choose a name, appoint at least one director and shareholder, verify each director's identity with Companies House, then register online for £100 with a registered office address, a SIC code and articles of association. Online registration usually completes within 24 hours, and Corporation Tax registration normally happens at the same time.

Knowing how to set up a limited company is easy; doing it in the right order is where people trip up. The process itself is mostly online and fast, but the 2026 version has two changes that catch founders out: Companies House fees doubled in February, and every director now has to verify their identity before the company can be registered. This guide walks through each step, the real costs, what happens after incorporation, and how to send your first compliant invoice using the free UK invoice generator.

If you are still deciding whether incorporating is worth it at all, read our comparison of sole trader vs limited company first. This article assumes you have decided to go ahead. It is general information, not legal or tax advice.

What a limited company is (and what you are signing up for)

A private company limited by shares is a separate legal person. It owns its own bank account, signs its own contracts, issues its own invoices and pays its own tax. Your personal liability is usually limited to what you paid, or agreed to pay, for your shares. In exchange, the company has to keep public records up to date at Companies House and file returns with HMRC every year.

The ongoing duties you take on from day one are:

• Filing annual accounts with Companies House (first accounts are due 21 months after registration, then 9 months after each financial year end).
• Filing a confirmation statement at least once every 12 months, with a £50 online fee.
• Filing a Company Tax Return within 12 months of the end of each accounting period and paying Corporation Tax 9 months and 1 day after it.
• Running payroll if you pay yourself a salary, and keeping a director's loan account for any other money you take out.

What you need before you register with Companies House

Gather these before you open the form. Having them ready is the difference between a 20-minute application and an abandoned one.

Item	What it means	Tips
Company name	Must be available and usually end in "Limited" or "Ltd"	Check the Companies House register and existing trade marks before you buy a domain or print anything
Registered office address	Official address on the public register, in the UK nation where you register	Use a registered office service if you do not want your home address public
At least one director	Person legally responsible for running the company	Each director needs a Companies House personal code from identity verification
At least one shareholder	Owner of the company's shares; can be the director	Decide the number of shares and their value (many one-person companies issue 100 shares of £1)
People with significant control (PSCs)	Anyone holding more than 25% of shares or voting rights, among other tests	In a one-person company, you are the PSC
SIC code	Standard Industrial Classification code that describes what the company does	Pick the closest match; you can update it later on the confirmation statement
Articles of association	The company's rulebook	Most small companies adopt the standard model articles
Registered email address	Email Companies House uses to contact the company	Not shown on the public register, but it must be monitored

How to set up a limited company: step by step

Here is the order that works in 2026, based on the GOV.UK guidance on registering your company.

1. Verify every director's identity. Each director verifies once through GOV.UK One Login, or through an Authorised Corporate Service Provider such as an accountant, and receives a personal code. Our guide to Companies House identity verification covers the documents and options. Do this first, because the application asks for each director's code.
2. Choose and check your company name. Search the register for identical or too-similar names, avoid sensitive words that need permission, and check trade marks.
3. Decide your structure. Choose limited by shares (the normal choice for a trading business), confirm directors, shareholders and share split, and identify your PSCs.
4. Pick a registered office address and SIC code. The address must be able to receive post. The SIC code describes your main activity.
5. Register online with Companies House. Use the GOV.UK "Register now" service, pay £100 by card, and create a Government Gateway user ID for the company (your personal ID cannot be used). The paper IN01 form costs £124 and takes 8 to 10 days.
6. Receive your certificate of incorporation. It shows your company number and date of formation. Save it, because banks and clients will ask for it.
7. Activate Corporation Tax. Registration normally sets this up. When your 10-digit UTR arrives, add Corporation Tax services to the company's business tax account.
8. Set up PAYE if you will pay a salary. You can register for PAYE during incorporation, including if you are the only director being paid.
9. Open a company bank account. Use the company number and certificate. Keep every business payment going through it.
10. Update your invoices and website. Add the registered name, company number, place of registration and registered office, then start invoicing in the company's name.

Register with Companies House: fees and timing in 2026

Companies House raised its fees on 1 February 2026. Digital incorporation went from £50 to £100, and the online confirmation statement from £34 to £50. The current figures from the Companies House fees guidance are below.

Filing	Online or software	Paper
Incorporation	£100	£124
Same-day incorporation	£156 (software only)	Not available
Confirmation statement (per 12-month payment period)	£50	£110
Voluntary strike off (DS01)	£13	£18

Formation agents often bundle the Companies House fee with extras like a registered office, a printed certificate or a bank introduction. Compare what you actually need: the statutory part of the bill is the £100.

Direct registration vs a formation agent

Registering directly through GOV.UK is the cheapest route and works well for a simple one-person company with standard articles. A formation agent or accountant earns its fee if you need non-standard share classes, several shareholders, a registered office and service address bundle, or help with identity verification as an Authorised Corporate Service Provider. Ask any agent whether they are registered as an ACSP, because Companies House is moving towards only accepting filings from verified agents.

Worked example: first-year costs and your first invoice

Priya, a freelance web designer, incorporates Priya Studio Ltd online in March 2026 and registers for VAT voluntarily. Her statutory costs for the first year are:

• Incorporation: £100
• First confirmation statement (due within 14 days of the end of the first 12-month review period): £50
• Total statutory fees: £100 + £50 = £150

Identity verification through GOV.UK One Login was free. Her accountant's fee and any registered office service are extra and vary by provider.

Her first client project is a website build at £2,500. In the free invoice generator she enters Priya Studio Ltd as the business, adds her company number, registered office and VAT number in the business details, and sets the tax rate to 20%:

Line	Amount
Website design and build	£2,500.00
VAT at 20%	£500.00
Total	£3,000.00
Amount paid (deposit received)	£1,000.00
Balance due	£2,000.00

Because the deposit was paid into the company account, the £3,000 is company income. Priya does not touch it personally until she pays herself a salary or a dividend, which keeps her director's loan account clean. For the full list of mandatory fields, see our guide to limited company invoice requirements, and start a clean invoice number sequence for the new company rather than carrying on from any old sole trader numbering.

Choosing shares, shareholders and articles

Most one-person companies issue a small number of ordinary shares, often 1 or 100 at £1 each, all held by the founder. That is perfectly valid, but think ahead. If a partner, spouse or investor may join later, issuing 100 shares makes it easier to transfer a round percentage. Different share classes, such as A and B ordinary shares with separate dividend rights, give more flexibility but need custom articles and careful advice, because HMRC looks closely at dividend arrangements between family members.

The model articles of association suit most small companies: they set out how directors make decisions, how dividends are declared and how shares are transferred. If two or more people will own the company, a separate shareholders' agreement covering what happens if someone leaves, falls out or wants to sell is worth having. It is private, unlike the articles, which are filed on the public register.

After incorporation: HMRC, payroll and VAT

Your company now exists, but several tax registrations follow. Work through them in the first few weeks.

Corporation Tax

Online registration usually sets the company up for Corporation Tax. Your first accounting period starts on the date of incorporation. In 2026/27 the main rate is 25%, the small profits rate is 19% for profits up to £50,000, and marginal relief applies in between. Our Corporation Tax guide works through the bands.

PAYE and paying yourself

Most owner-directors pay themselves a small salary through payroll and the rest as dividends. That needs a PAYE scheme and Real Time Information submissions. The split is a tax decision in its own right, covered in director salary vs dividends, while the personal tax on dividends is explained in dividend tax rates for 2026.

VAT

You must register for VAT if taxable turnover passes the threshold, and you can register voluntarily below it. Check the current figure and the rolling 12-month test in our UK VAT registration threshold guide. Once registered, the company is covered by the VAT penalty points system, so it is worth reading how VAT penalties work before the first return is due.

IR35 for contractors

If you are setting up a company to contract through, check whether your engagements fall inside the off-payroll rules. Status depends on the working practices of each contract, not on the company structure, so a limited company does not take you outside IR35 by itself.

Your first-year compliance calendar

Deadline	Filed with	Timing
First confirmation statement	Companies House	Within 14 days after the end of the first 12-month review period
First annual accounts	Companies House	21 months after registration
Corporation Tax payment	HMRC	9 months and 1 day after the end of the accounting period
Company Tax Return (CT600)	HMRC	12 months after the end of the accounting period
Payroll (RTI) submissions	HMRC	On or before each payday
VAT returns (if registered)	HMRC	Usually quarterly, one month and 7 days after each period

Late accounts carry automatic Companies House penalties that start at £150 for a private company and rise to £1,500 if more than six months late, doubling if accounts are late two years in a row. Put every date in your calendar the day you incorporate.

Common mistakes when setting up a limited company

• Leaving identity verification until the last minute. The application cannot be completed without each director's personal code.
• Using a home address as the registered office without thinking. It becomes public. Changing it later does not remove old filings from the register.
• Paying business costs from a personal account. It blurs the line between you and the company and makes year-end accounts harder. Set up proper bookkeeping from day one.
• Taking money out without a plan. Withdrawals that are not salary, dividends or expense repayments go to the director's loan account and can trigger a 33.75% Corporation Tax charge if not repaid in time.
• Invoicing in your own name. Once the company exists, contracts and invoices should be in the company's name, not yours as a sole trader.
• Forgetting the confirmation statement. It is due even if nothing has changed, and it now cannot be filed until all directors have verified.

Is a limited company the right choice?

Incorporating usually makes sense when profits are high enough that the salary and dividend mix saves meaningful tax, when you want limited liability, or when clients only engage contractors through companies. It makes less sense for a small side income, where the extra filings, accountancy cost and payroll admin can outweigh the savings. If you change your mind later, a company can be closed through voluntary strike off or liquidation, as explained in how to close a limited company, but it is easier to choose carefully up front.

Create your first limited company invoice

Once you know how to set up a limited company and the certificate is in hand, the next job is getting paid. Open the invoice generator, add your company name, number, registered office and VAT number, pick a professional design from the corporate invoice template, and send your first invoice in minutes. Everything is free, and your details stay ready for the next one. Every invoice exports as a PDF, so it looks the same on your client's phone, laptop or printer.