Guide

Set up a limited company

Steps to incorporate and register your limited company.

Manufacturing & EngineeringTechnology & Digital UK-wide Limited Company

A limited company is a separate legal entity from its owners. Your personal assets are protected from business debts (limited liability). You'll need to register with Companies House and comply with ongoing filing requirements.

IMPORTANT: Identity verification required from November 2025

From 18 November 2025, all directors and People with Significant Control (PSCs) must verify their identity with Companies House before appointment. This is a legal requirement - you cannot register directors without verification.

Start early: Complete identity verification before starting company registration. Verification is instant if your details match government records, but allow time for any issues.

What you need to set up

Directors
Minimum 1 director (must be a natural person aged 16+). Can be sole director and shareholder.
Shareholders
Minimum 1 shareholder. Can be individuals or corporate entities.
Company secretary
Optional for private companies. Recommended for larger companies.
Registered office
Must be a UK address. Can be your accountant's office or a registered office service.
SIC codes
Standard Industrial Classification codes describing your business activities (1-4 codes required).

Registration process

Registration fees

  • Standard online: £50
  • Same-day incorporation: £78
  • Paper application: £71

Documents required

  • Form IN01: Application to register a company
  • Memorandum of Association: Constitutional document stating initial subscribers
  • Articles of Association: Rules governing how the company operates (use model articles or create bespoke)

What you'll receive

  • Certificate of incorporation with your company number
  • Your company will appear on the Companies House register
  • You can then register for Corporation Tax with HMRC

Ongoing compliance requirements

Annual filings

  • Confirmation statement: £34 online, due annually (confirms company details are up to date)
  • Annual accounts: Due within 9 months of year-end (first accounts may have 21 months)
  • Corporation Tax return (CT600): Due within 12 months of year-end, filed with HMRC

Statutory registers

You must maintain registers of:

  • Directors and their service addresses
  • Shareholders (members)
  • People with Significant Control (PSCs) - anyone with >25% shares/voting rights
  • Charges (mortgages and security on company assets)

From November 2025: Mandatory identity verification for all directors and PSCs.

Company size classifications and what they affect

Your company's size classification determines whether you need a statutory audit, what accounts you can file, and whether IR35 off-payroll rules apply to contractors. From April 2025, thresholds are increasing significantly, meaning more companies will qualify as 'small' and benefit from reduced compliance requirements.

Directors' statutory duties

Under the Companies Act 2006, directors have seven key duties:

  1. Act within powers: Only use powers for their intended purpose
  2. Promote success of the company: Consider long-term consequences, employees, suppliers, customers, community
  3. Exercise independent judgment: Make your own decisions, don't blindly follow others
  4. Exercise reasonable care, skill, and diligence: What would reasonably be expected of someone in your role
  5. Avoid conflicts of interest: Cannot put personal interests above company interests
  6. Not accept benefits from third parties: Cannot accept benefits that compromise loyalty
  7. Declare interest in transactions: Disclose any personal interest in company transactions

Breach consequences: Personal liability, derivative claims by shareholders, disqualification from being a director (2-15 years).

Tax for limited companies

Corporation Tax (2025/26)

  • Small profits rate: 19% on profits up to £50,000
  • Main rate: 25% on profits over £250,000
  • Marginal relief: Gradual increase from 19-25% for profits £50,000-£250,000

Optimal salary and dividends strategy

Most owner-directors take a combination of salary and dividends to minimise tax:

  • Optimal salary: £12,570 (Personal Allowance) - no Income Tax, minimal NI
  • Dividends: Remaining profits taken as dividends - no NI, lower tax rates (8.75%/33.75%/39.35%)
  • Dividend allowance: First £500 of dividends tax-free

Director's loan account

If you borrow from your company:

  • Loans over £10,000 trigger benefit in kind (taxable)
  • Loans not repaid within 9 months of year-end: 33.75% Section 455 tax due (increasing to 35.75% for loans made from 6 April 2026)
  • Interest must be charged at HMRC's Official Rate (3.75% from 6 April 2025) or it's a taxable benefit

Dividend tax rates in detail

  1. Verify your identity with Companies House

    From 18 November 2025: All directors must verify identity using GOV.UK One Login before registration. You'll receive a personal verification code.

  2. Check your company name is available

    Search Companies House register. Cannot be 'same as' or 'too like' an existing name.

  3. Choose directors and shareholders

    Minimum 1 director (natural person) and 1 shareholder. Can be the same person.

  4. Decide on share structure

    How many shares, what class, and who holds them. Keep it simple - 100 ordinary shares is common.

  5. Register with Companies House

    Apply online (£50) for standard incorporation or £78 for same-day.

  6. Register for Corporation Tax

    Tell HMRC within 3 months of starting to trade. You'll need your company UTR.

  7. Set up business bank account

    Most banks require certificate of incorporation. Company funds must be kept separate from personal.

  8. Appoint an accountant

    Limited company accounts require specialist knowledge. Budget £500-1,500/year for a small company.