Cost of Setting Up a UK Limited Company
A clear, engaging guide to the real and hidden costs of forming a limited company in the UK—covering official fees, ongoing expenses, and practical tips for new founders and freelancers.
Why Set Up a Limited Company in the UK?
Setting up a limited company is a defining leap for many contractors, freelancers and small business founders. The structure offers financial protection, a professional image, and often easier access to essential contracts. But before any leap, there’s always that nagging question: How much is this going to cost? Let’s unravel the numbers together.
Direct Costs: The Price Tag on Formation
- Companies House (Online): £12 (standard and most common method)
- Companies House (Paper): £40 (if you apply by post)
- Using Formation Agents: Ranges from £15–£150+, depending on add-ons (registered address, bank account setup, etc.)
"Setting up a limited company is surprisingly affordable—often less than a family dinner out. But the real expenses sneak in after formation."
Table: Typical One-Off Formation Costs
| Expense | Typical Cost |
|---|---|
| Online Companies House Filing | £12 |
| Postal Companies House Filing | £40 |
| Formation Agent (basic package) | £15–£30 |
| Agent (premium, with extras) | £50–£150+ |
| Registered Office (first year) | £10–£50 |
Ongoing Fees: The Catch Beneath the Surface
- Confirmation Statement (annual): £13 (online), £40 (paper)
- Accounting Fees: £500–£2,000/year, depending on complexity
- Registered Office Address: £10–£150/year
- Business Bank Account: Often free, some charge £5–£10/month
- VAT Registration: No fee, but compliance costs if over threshold
:star: Don’t forget corporation tax (usually 25% on profits over £50,000), and costs like payroll software or directors’ insurance!
"The main cost is rarely the formation itself—it’s the paperwork, filings, and compliance that will fill your calendar and nibble at your profits."
Bullet Points to Remember
- Bare minimum for formation: £12 (DIY, online)
- More realistic first-year spend: £500–£3,000+
- Accountant help is worth budgeting for—HMRC fines for mistakes are no joke!
Formation Extras You Might Need
- Domain name registration: £10–£20/year
- Professional indemnity or public liability insurance: from £10/month (not legally required, but often essential)
- Virtual office or phone service: £10–£50/month
Consider this:
"While the initial setup is low-cost, growing your company responsibly comes with many little extras along the way."
Are There Any Hidden Fees?
Absolutely. Some agents upsell services you may not need (annual filings, mail forwarding), and some business bank accounts come with unavoidable admin fees. Always read the small print.
A Story from the Field
Sarah, a freelance designer, thought setting up her company was all about the £12 fee. A year in, she’d spent nearly £1,000—mainly on accountant advice and insurance she didn’t initially know she needed. Her advice? — "Budget realistically. Ask those who’ve done it before. The little things add up."
Quick Checklist for New Founders
- Decide if a limited company is right for you
- Prepare a company name and address
- Budget at least £500–£1,000 for first-year costs (beyond filing)
- Consult an accountant
Final Thoughts
Setting up a limited company in the UK remains refreshingly democratic—you can do it yourself, at kitchen-table prices. But don’t be fooled: ongoing costs, paperwork, and compliance will shape your first years just as much as your business idea.
Ready to leap into UK company ownership?
Start by building your budget—and have a cuppa while you plan.
Thinking of going limited? Share your experiences and tips in the comments, or reach out if you want more real-world advice on starting up in the UK.
