When forming a limited company in the UK, the first concern comes to mind: what to pay, and how much it costs to set up a limited company in the UK? UK limited company expenses may vary depending on various factors. Whether you are a resident or a non-resident, you must be prepared with financial resources to spend launching a business globally, including maintenance costs for the fiscal year.
In this guide, I will help you to get a clear breakdown of effective budgeting for the average costs of running a limited company in the UK.
Understanding UK Limited Company Expenses
Understanding the expenses of a limited company is quite essential—if you are considering registering a limited company in the UK. This can play a vital role in your decision-making process.
When we are saying the cost of a UK limited company, it doesn’t mean only the Companies House register’s cost. But also includes various factors such as accountant fees, annual filing fees, compliance costs, operational costs, and many more. Determining these expenses in advance can help you plan your budget effectively by avoiding unexpected burdens.
How Much Does It Cost to Start a Limited Company?
Before starting the discussion about setting up costs for a limited company, it’s better to make a clear decision about the route you want to take to form your business.
Options to Form a UK Limited Company
There are three different options or routes you can choose to set up a limited company in the UK. Having clear knowledge will help you to optimize expenses for a limited company formation.
- Do It Yourself (DIY): When forming a limited company in the UK, doing it yourself directly through the Companies House online service is the most cost-effective option.
- Initially, setting up a limited company in the UK online involves direct costs such as registration with Companies House, which will cost £50. You can pay this fee by using both a debit or credit card and PayPal.
- Alternatively, if you choose to file the IN01 Form by post, the cost will be £71. For this, you need to write a cheque and make it payable to Companies House.
While this option saves money, it requires you to be thorough with the legal requirements and documentation.
- Initially, setting up a limited company in the UK online involves direct costs such as registration with Companies House, which will cost £50. You can pay this fee by using both a debit or credit card and PayPal.
- Using an Online Company Formation Service: Many entrepreneurs choose to use online formation services like Business Globalizer to set up their limited companies. These services provide a balance between DIY and professional help, assisting with filing necessary documents and offering additional features like registered office addresses or statutory compliance packages. They can be a convenient and reliable way to ensure everything is completed correctly for non-residents in the UK.
Fees for these services may vary between £50 and £275–depending on the packages, level of support, and additional features you require. - Hiring an Accountant: Another option to set up a limited company in the UK is hiring an accountant or professional. These experts will take care of your company formation process with all the legal documentation by ensuring compliance with UK regulations. Accountant fees for a Ltd. company to register with Companies House may cost between £150 and £500. Though this is the most costly option, this will save you time.
Initial Costs to Set Up a Limited Company in the UK
Now that we’ve covered the setup options, let’s learn the key expenses you will need to budget while starting a limited company. For your better understanding, I will give you a clear breakdown of the initial costs you may expect:
Incorporation Cost: As we mentioned above, there are different options to set up a limited company in the UK. So, the incorporation cost may vary depending on which method you will pick along with the Companies House registration fee.
- Also, if you prefer same-day online incorporation, Companies House will charge you £78.
Note: The tagged pricing is based on the present database. You must check the specific fee while forming your limited company, whether doing it yourself or hiring third parties.
- Company Name Registration Fees: Choosing a unique name is essential when incorporating a limited company in the UK. The cost to register a company name is typically included in the registration fee you provide to Companies House.
- Formation Documents and Legal Templates: Although not a large expense, you may need to purchase legal templates such as articles of association or other documents required for company formation. These templates might cost around £20 to £50.
- Registered Office Address Fees: When doing business in the UK, every limited company must have a registered office address that will be publicly accessible through Companies House. You can use the home address of a professional service provider by following the criteria to comply with the changes to UK Company Law 2024.
The registered office service costs may range from £30 to £200 per year, depending on the provider and location you choose. - Optional Services and Extras: You must consider the optional costs to set up a limited company in the UK. These may include the director’s service address, UTR, statutory mail forwarding, PSC register, etc.—often come as part of packages with the UK company formation services.
Costs of Running a Limited Company in the UK
Aside from the initial expenses listed above, you might encounter other ongoing costs of running a limited company in the UK:
- Business Bank Account: When setting up a limited company in the UK, you need to open a business bank account to separate your personal and business finances. Though most bank accounts setting up cost is free, some banks may charge a small fee after the introductory period. This typically ranges from £5 to £15 monthly.
- Annual filing fees with Confirmation Statement: Once your limited company is established, you must file an annual “Confirmation Statement” once a year. This ensures that your company details are up-to-date. You can file this statement online or by post.
As of May 2024, filing a confirmation statement online costs £34, and filing by post is more costly at £62. - Accounting and Bookkeeping Costs: A well-managed company’s foundation is its accurate financial records. You may manage bookkeeping yourself, depending on the size and complexity of your business, but many choose to engage an accountant. From simple bookkeeping to creating annual accounts, accountants can assist with it all.
Depending on your requirements, the monthly fee may vary from £50 to £300. Professional bookkeeping may appear to be an addition to your expenses. However, it can prevent costly errors and facilitate more efficient financial management. - Corporation Tax and VAT: Corporation tax on profits is a requirement for all limited companies. You must register for VAT if your annual turnover is over £90,000. Even if the annual turnover doesn’t hit the threshold, you can do voluntary VAT registration.
Though you don’t need to pay any direct costs to register for VAT—you may incur additional costs if you choose to outsource this work. - Payroll and Employee Costs: If you have employees, you will have to deal with payroll, which involves calculating salaries and deductions and sending an instant report to HMRC. The monthly cost of payroll software can range from £20 to £50, but it may go further if you need more sophisticated features or more help.
Alternatively, many companies hire payroll services to manage this on their behalf, which adds to the ongoing costs. - Business Insurance: Getting business insurance (such as employer’s liability, professional indemnity, or public liability insurance) is strongly advised to guard against potential hazards, even if it is not legally necessary for all organizations.
The annual cost of insurance normally ranges from £100 to £1,000, with variations based on the type of coverage and nature of the limited company. - Miscellaneous and Compliance Costs: Additional costs may include compliance with industry-specific regulations, software subscriptions, office rental (if applicable), and marketing expenses to grow your business. These can vary widely based on the specific needs and operations of your company.
Are There Any Ongoing Costs Associated with Changing Certain Company Details?
Yes, there are ongoing costs associated with changing certain company details of a limited company in the UK that are listed below:
- Changes of Company Name: When running a limited company, if there are situations like you need to change your registered company name, this will cost you a certain fee to Companies House.
As of 2024, changing a company name online will cost you £20 and £30 for paper filing. If you need the same-day service, it costs £83. - Re-Registration: If you want to change the company structure (for instance, from a private limited company to a public limited company), you need to re-register your limited company by paper filing with Companies House. This will cost £71.
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FAQs
Q1: What are the basic costs to set up a limited company online?
Answer: Setting up a limited company will cost you £50 if you file online.
Q2: Is it cheaper to run a UK-limited company if I handle everything myself?
Answer: Yes, definitely. Handling everything yourself can save you professional fees but you need to be very careful about complying with legal and financial requirements.
Q3: Do I need business insurance for my limited company in the UK?
Answer: Getting business insurance isn’t required for all limited companies but having this can protect against risks.
Q4: What are the penalties for late filing of annual accounts with Companies House?
Answer: Companies face penalties if they miss the deadline to file annual accounts, so it’s crucial to file on time to avoid extra costs.
Final Words
So, that’s it. I hope I covered every aspect of UK limited company expenses for you. When considering the costs of running a limited company in the UK—including UK company registration costs also—the entire expenses depend on the registration method you choose, filing time, and the specific business needs.
Beyond the registration fee with Companies House, you should budget for extra associated costs such as hiring an accountant, annual filing fees, compliance costs, changes in information, etc.
You may face complexity when registering a limited company by yourself. In this case, you can consider company formation service provider Business Globalizer to ensure a smooth and error-free company formation process. Our dedicated team will help you with each step and avoid making costly mistakes.