Starting a Limited Company: What You Need to Know

Starting a limited company is cheap. Running one costs more, and it is the running costs that people tend to underestimate. This guide sets out limited company costs as they stand in 2026: the fees every company pays, the ones that depend on what you do, and a sensible first-year budget for a one-person company. Every government fee below is taken from GOV.UK and was checked in October 2026.

Limited company costs you cannot avoid

Registering the company: £100

Companies House charges £100 to register a company online, £124 on paper and £156 for same-day registration. Whoever forms the company for you passes this fee on, so a formation package priced below £100 will add it at checkout. Our company formation works the same way: our fee, plus the Companies House fee, shown before you pay.

Confirmation statement: £50 a year

Every company files a confirmation statement at least once a year to confirm its details are right. The Companies House fee is £50 online, payable once in each 12-month period. If you would rather not deal with it, our confirmation statement filing includes the fee.

Identity verification: free, or a small fee

Every director and person with significant control must verify their identity. Doing it yourself through GOV.UK One Login is free. Using an authorised agent, such as an accountancy firm, costs a fee but suits people who cannot use the online service or want someone to handle it, which is what our director ID verification is for.

Accounts and tax returns

Every company must prepare annual accounts for Companies House and HMRC and file a Corporation Tax return, even in a year with no profit. You can do this yourself with software, but most owners use an accountant, because the accounts have to follow set formats and mistakes lead to penalties. This is usually the largest single cost of running a company.

Costs that depend on your business

A registered office address

The registered office is published on the public register. You can use your home, but many owners pay for a registered office address to keep their home private. Ours costs £4.99 a month, with mail forwarding available on top.

A business bank account

The company's money must be kept apart from yours. Several banks offer accounts with no monthly fee for new businesses, often for an introductory period, then a monthly charge or a fee per transaction. Compare the charges for the way you will actually use it, such as cash deposits or card payments.

Insurance

Employers' liability insurance is a legal requirement once you employ staff, although a company whose only employee is its owner-director is usually exempt. Professional indemnity and public liability are not compulsory but are often required by clients or landlords. Prices depend entirely on the work you do.

The ICO data protection fee

Most businesses that hold personal data on a computer, including customer details, must pay the data protection fee to the Information Commissioner's Office. For small organisations it is £52 a year, or £47 by direct debit. Some businesses are exempt, and the ICO's online check tells you in a couple of minutes.

Payroll, VAT and the extras

Registering for PAYE and VAT with HMRC is free, but running payroll and filing VAT returns each quarter takes time or an accountant's fee. Software for bookkeeping and Making Tax Digital usually costs a monthly subscription. A website, domain and email address are not legally required, but most businesses need them.

A first-year budget for a one-person company

Here is what a typical owner-director with modest turnover might spend in the first year. Your figures will differ, but it shows the shape of the costs.

ItemTypical first-year cost Companies House registration£100 Formation serviceFrom a few pounds Confirmation statement (Companies House fee)£50 Registered office addressAbout £60 ICO data protection fee£47 to £52, if it applies Accountant for accounts and returnsThe largest item; see below Business bank accountOften free in year one InsuranceDepends on your work

Leaving out insurance and the accountant, the compulsory costs for a small company come to around £250 to £300 in the first year. Add the accountant, and most small companies spend between a few hundred and a couple of thousand pounds a year in total. For a fixed monthly figure for your own company, get an instant quote.

Penalties: the cost of getting it wrong

The most expensive limited company costs are often the avoidable ones. Companies House fines a private company £150 if its accounts are up to a month late, rising to £1,500 if they are more than six months late, and the fine doubles if the accounts were also late the year before. HMRC charges £100 for a Corporation Tax return filed a day late, more after three and six months, and interest on tax paid late. Keeping a calendar of your deadlines, or having an accountant keep it for you, saves far more than it costs.

Is a company worth the cost?

A company costs more to run than working as a sole trader, and since April 2026 the tax saving from taking all the profit out has narrowed. The case for a company now rests on limited liability, keeping profit in the business at Corporation Tax rates, and how clients see you. Our company vs sole trader guide runs the numbers, and our guide to your first two years as a company covers what to do once it is set up.