How to Set Up a Limited Company
in the UK: Step-by-Step Guide

Registering a private limited company in the UK is one of the most straightforward things you can do as a business owner — once you know the steps. The actual registration at Companies House costs just £50 and can be completed online the same day. The complexity lies in getting the pre-registration decisions right: your company name, SIC code, share structure, and registered address all have lasting consequences that are time-consuming to change later.

This guide walks through every stage in plain English, from the decision to incorporate all the way to your first steps after your certificate of incorporation arrives. All references reflect the Companies Act 2006, current HMRC guidance, and Companies House requirements as at June 2026.

01 Is a limited company right for you?

Before registering, confirm that the limited company structure is the right choice. The two most common alternatives are operating as a sole trader or as a partnership. Here is how they compare on the factors that matter most:

If you are a contractor, run a business with significant profit, want to protect personal assets, or plan to bring in investors, a limited company is almost always the better structure. The additional filing obligations are manageable with a good accountant and accounting software.

02 Choose and check your company name

Your company name must be unique on the Companies House register and comply with the naming rules in the Companies Act 2006, ss.53–74. Key rules:

• The name must end in “Limited” or “Ltd” (for private limited companies).
• It must not be the same as or too similar to an existing registered name. Use the Companies House Find and Update Company Information service to check.
• Certain “sensitive” words such as “Bank”, “Royal”, “NHS” or “Chartered” require prior approval from a relevant authority before use.
• The name cannot contain offensive words or suggest a connection with a government body.
• Once incorporated, you must display the full registered company name on all business letters, websites, invoices and premises under the Companies (Trading Disclosures) Regulations 2008.

03 Choose your SIC code

A Standard Industrial Classification (SIC) code identifies the nature of your business activity. You must provide at least one SIC code when filing the IN01 form, and you may provide up to four. SIC codes are drawn from the SIC 2007 list maintained by Companies House.

SIC codes affect how your company appears on the register and can influence credit ratings and sector analysis, but they have no direct tax consequence. However, choosing an inaccurate code can cause confusion if your company’s activities are queried by HMRC or other parties.

• Search the list: Companies House publishes the full SIC 2007 list. Search by keyword (e.g. “software”, “construction”, “restaurant”) to find the most appropriate code.
• Multiple activities: If your company will carry out several distinct activities, list up to four codes in order of significance.
• Changing later: You can update your SIC codes at any time by filing a Confirmation Statement (CS01) at Companies House. There is no penalty for changing codes as your business evolves.

04 Appoint directors and issue shares

Under Companies Act 2006, s.154, a private limited company must have at least one director. Directors must be at least 16 years old (s.157) and cannot be a disqualified director under the Company Directors Disqualification Act 1986. All directors’ details — full name, date of birth, nationality and residential address — must be provided on the IN01 form. The residential address is protected from public inspection; a service address can be used for correspondence instead.

Shareholders and share capital

You must issue at least one share to at least one shareholder. Most new companies issue 100 ordinary shares at £1 each (£100 total share capital), which is the simplest structure and gives flexibility to transfer shares in future. The share capital does not need to be paid immediately — shares can be issued as partly or fully paid.

05 Choose a registered office address

Every company must have a registered office address in the same jurisdiction as its incorporation: England and Wales, Scotland, or Northern Ireland. The registered office is publicly visible on the Companies House register and is used for all formal legal correspondence, including notices from HMRC and Companies House.

• Using your home address: You may use your residential address. This is publicly visible on the register. You can later apply to suppress a home address from the register under the Companies Act 2006, s.1088, if there is a personal safety risk.
• Using a professional address: Many accountants and law firms offer a registered office service. DKAT Accountants can provide a registered office address in London for clients. This keeps your home address private and provides a professional-looking address on the public register.
• Virtual office services: These are also permissible, provided post is reliably forwarded. Ensure the service explicitly states it accepts Companies House and HMRC correspondence.

06 Prepare your Articles of Association

The Articles of Association govern how the company is run internally. Under Companies Act 2006, s.20, if you do not file customised articles, the company automatically adopts the Model Articles for Private Companies Limited by Shares (Schedule 1 to the Companies (Model Articles) Regulations 2008 (SI 2008/3229)).

The Model Articles are well-suited to most small owner-managed companies. They cover:

• Directors’ decision-making and meetings
• Issue and transfer of shares
• Dividend declarations
• Directors’ conflicts of interest
• Shareholder rights and voting

Customised articles are recommended if you have multiple founders with different share classes, investor rights, pre-emption rights on share transfers, or complex governance requirements. This requires a solicitor or specialist company formations agent to draft.

07 Register with Companies House (the IN01)

The IN01 is the application to register a new company at Companies House. You can file it online at gov.uk/limited-company-formation. The cost is £50 and registration is usually completed within 24 hours (often the same working day).

The IN01 requires:

• Proposed company name
• Registered office address and jurisdiction
• SIC code(s)
• Director details (full name, DOB, nationality, service address, residential address)
• Shareholder details and share capital structure
• PSC details
• Statement of compliance (confirming the CA2006 requirements are met)
• Choice of Articles (Model or custom — if custom, upload as PDF)

On successful registration, Companies House issues a Certificate of Incorporation (under CA2006, s.15) confirming the company’s registered name, company number, date of incorporation and jurisdiction. This certificate is your company’s birth certificate. Keep it permanently — you will need the company number for all future filings.

08 Register with HMRC after incorporation

Incorporation at Companies House creates the company as a legal entity. Separately, you must notify HMRC of several obligations:

Corporation Tax Within 3 months of starting to trade

Under Finance Act 2004, Schedule 12 and the Corporation Tax Act 2009, s.5, you must register the company for corporation tax within three months of starting to carry on a business or becoming liable to corporation tax. Register online at HMRC’s “Register your company for Corporation Tax” service using your company number and the date trading commenced. HMRC will send your Unique Taxpayer Reference (UTR) by post to the registered office address.

PAYE Before first payroll

If you (as director) or any employee will receive a salary above the Lower Earnings Limit (£6,396 in 2025/26), you must register as an employer and set up PAYE before the first payroll run. Register online at gov.uk. HMRC will issue a PAYE reference number. All payroll submissions must be made in real time under the Real Time Information (RTI) regime on or before each payday.

VAT Within 30 days of exceeding £90,000 threshold

Under Value Added Tax Act 1994, Schedule 1, you must register for VAT when your taxable turnover exceeds £90,000 in any rolling 12-month period, or when you expect it to exceed £90,000 in the next 30 days. Voluntary registration below this threshold is also possible and can be beneficial if your customers are VAT-registered. Once registered, all VAT returns must be submitted using Making Tax Digital-compatible software.

Construction Industry Scheme (CIS) Before first payment to subcontractor

If your company operates in the construction industry as a contractor (making payments to subcontractors), you must register under the Construction Industry Scheme before making the first payment. Registration as a subcontractor is also advisable to secure the 20% deduction rate (rather than 30%).

09 Set up banking and bookkeeping

Once incorporated, your company has its own legal identity and its own finances that are entirely separate from your personal finances. Setting up the right infrastructure from day one prevents significant problems later:

Business bank account

A dedicated business bank account is legally required for limited companies. The company’s money belongs to the company, not the director. Mixing personal and company funds (co-mingling) is a serious breach of directors’ duties under the Companies Act 2006, s.172 and can expose you to personal liability, particularly in insolvency scenarios. Most high-street and challenger banks offer business accounts; allow 1–4 weeks for approval.

MTD-compliant accounting software

From day one, all VAT-registered companies must keep digital records under Making Tax Digital for VAT. For income tax purposes, all sole traders and landlords with income above £50,000 are in scope for MTD ITSA from April 2026. Set up one of the HMRC-approved platforms: Xero, QuickBooks, FreeAgent, Sage or QuickFile. These platforms handle VAT returns, bank reconciliation and can generate draft CT600 data for your accountant.

Post-incorporation checklist

• Obtain your Certificate of Incorporation and Company Number
• Register for Corporation Tax within 3 months of first trade
• Open a dedicated business bank account
• Register for PAYE before the first salary payment
• Register for VAT if/when the £90,000 threshold is reached (or voluntarily)
• Set up MTD-compliant accounting software
• Issue share certificates to shareholders
• Hold and minute the first board meeting
• Set up a dividend declaration process if you plan to extract profits as dividends
• Appoint an accountant to handle annual accounts and CT600
• Note key deadlines: annual accounts due 9 months after year-end; CT600 12 months after year-end; CT payment 9 months and 1 day after year-end

10 Common mistakes and how to avoid them

• Failing to register for Corporation Tax on time. The penalty for late notification is fixed at £100 under Schedule 12 FA2004. Beyond the penalty, HMRC may raise estimated assessments that are difficult to challenge without proper records.
• Co-mingling company and personal funds. Directors who treat the company bank account as a personal account risk overdrawn director’s loan account charges (Section 455 CTA 2010, 33.75% tax on overdrawn balances not repaid within 9 months and 1 day of year-end) and potential personal liability.
• Choosing the wrong SIC code. While not catastrophic, an incorrect SIC code can cause confusion during VAT registration, CIS registration, and sector-specific compliance checks.
• Using a residential address without understanding the implications. Your home address becomes permanently publicly visible on Companies House unless you take specific steps to suppress it. Consider a professional address service from the outset.
• Not taking dividends correctly. Dividends must be declared by a board resolution, supported by distributable reserves, and evidenced by a dividend voucher. “Drawings” taken without formal declaration are treated as director’s loans, not dividends, and attract S455 tax.
• Missing the annual accounts and Confirmation Statement deadlines. Late filing penalties at Companies House start at £150 and rise to £1,500 for accounts more than 6 months late. Two consecutive late filings can result in the company being struck off.

11 Frequently asked questions