Cost of Setting Up a Company in the UK

Published on October 3, 2025 and written by Cyril Jarnias

The United Kingdom is renowned for its business-friendly environment and ease of company formation. However, before taking the plunge, it’s crucial to fully understand the various costs associated with establishing a company in this country. This article will guide you through the main expenses to anticipate and provide tips for optimizing your budget.

Registration Fees: The Essential First Step

Setting up a company in the UK begins with its official registration at Companies House, the British equivalent of the commercial registry. The basic registration fees for a limited company (LTD) are typically £12 for a standard online procedure. This amount may vary slightly depending on the company type and desired processing speed.

It’s important to note that these fees only cover basic administrative registration. Additional expenses may include:

• Company name reservation fees (approximately £30 if you wish to reserve it before registration)
• Costs related to drafting company articles of association (if using professional services)
• Potential translation fees if your documents are in a language other than English

Complying with Legal Requirements: A Necessary Investment

Once your company is registered, several compliance costs should be anticipated to remain compliant with British legislation. These expenses include:

1. Accounting and Tax Filings

In the UK, all companies are required to maintain accounting records and produce annual accounts. The cost of an accountant for a small business can range between £500 and £2,000 per year, depending on your business complexity and required service level.

2. Professional Liability Insurance

Although not mandatory for all activities, this insurance is highly recommended. Its annual cost can range between £50 and £1,000, depending on your industry sector and chosen coverage level.

3. Data Protection (GDPR)

If your business processes personal data, you must register with the Information Commissioner’s Office (ICO). Annual fees range from £40 to £2,900, depending on your company’s size and turnover.

4. Specific Licenses and Permits

Certain activities require specific licenses. For example, a license to sell alcohol can cost between £100 and £1,905, depending on the locality and license type.

Startup Capital: Funding Your Business Launch

The initial investment required to set up a company in the UK largely depends on your business nature. However, some elements are common to most businesses:

1. Share Capital

In the UK, there’s no legal minimum amount for an LTD’s share capital. You can theoretically set up a company with just £1 in capital. However, higher capital can strengthen your business credibility with partners and investors.

2. Equipment and Supplies

Depending on your activity, you may need to invest in computer equipment, office furniture, or specific tools. This category can represent anywhere from a few hundred to several thousand pounds.

3. Website and Visual Identity

An online presence is now essential. The cost of a professional website can range from £500 to £5,000 or more, depending on its complexity. Don’t forget to include logo creation and branding guide expenses.

4. Initial Working Capital

It’s crucial to allocate sufficient working capital to cover expenses during the first months of operation, before your business generates revenue. This amount can range from a few thousand to several tens of thousands of pounds, depending on your industry and business model.

Recurring Expenses: Anticipate to Manage Better

Once your company is established and operational, several recurring expenses should be anticipated:

1. Office Rental

If you need professional premises, rental costs can vary considerably by location. In London, expect between £300 and £1,500 per month for a small office. In other cities, prices can be significantly lower.

2. Salaries and Social Charges

If you hire employees, remember to budget for salaries and social contributions. The current UK minimum wage is £9.50 per hour for people aged 23 and over. Employer contributions (National Insurance contributions) amount to 13.8% above a certain threshold.

3. Professional Services

You’ll likely need regular professional services, such as an accountant or lawyer. These costs can represent several thousand pounds per year.

4. Banking Fees

Banking fees for a UK business can vary by bank and services used. Expect between £5 and £50 per month for a basic business bank account.

Optimizing Your Expenses: Strategies to Reduce Costs

Although some costs are unavoidable, several strategies exist to optimize your expenses when setting up and managing your UK company:

1. Opt for Remote Work

By allowing your employees to work remotely, you can significantly reduce office rental costs. The UK has excellent digital infrastructure that facilitates remote work.

2. Use Online Services

Many administrative tasks can be performed online at lower cost. For example, registering your company through the Companies House website is cheaper than the paper procedure.

3. Take Advantage of Tax Incentives

The UK offers various tax incentives for businesses, particularly for research and development. Consult with a tax advisor to optimize your situation.

4. Explore Alternative Funding Options

Beyond traditional bank loans, explore options like crowdfunding or business angels, which can offer more favorable terms for startups.

5. Invest in Technology

Using online management and accounting tools can generate significant savings on professional services in the long term.

In conclusion, setting up a company in the UK involves various costs that are important to anticipate properly. Although some expenses are unavoidable, careful planning and adopting optimization strategies can help you manage your budget effectively. The UK remains an attractive environment for entrepreneurs, offering a good balance between relatively low setup costs and significant growth opportunities.