Starting a business comes with two sets of costs. One is the fee to register. The other is the ongoing cost of staying compliant. The first is usually small. The second has more impact on your budget over time.
This guide covers both. It looks at registration fees by business structure, the ongoing compliance costs for limited companies, and ways to keep them down.
Quick answer
Sole trader registration is free. Limited company registration costs £100 online at Companies House. Partnership registration is free in most cases. The bigger costs come after registration: accountancy, software, insurance, and annual filings. For limited companies, these usually add up to £1,000 to £2,500 in year one.
| Structure | Government registration fee | Annual compliance cost estimate |
|---|---|---|
| Sole trader | £0 | £300 to £600 (insurance, software) |
| Partnership (basic) | £0 | £400 to £800 (varies by type) |
| Limited company | £100 online | £1,000 to £2,500+ (accountancy, filings) |
How much does it cost to register as a sole trader in the UK?
Sole trader registration is free. You register with HMRC for Self Assessment at no cost. National Insurance registration is also free. A trading name costs nothing to use. Insurance, accounting software, and banking are optional at the start. What you spend in year one depends on your business type.
There is no government fee to become a sole trader. You register for Self Assessment on GOV.UK, which tells HMRC you are self employed. You can do this online in about 10 minutes.
The costs that do apply in year one are optional, but they are worth planning for:
Professional indemnity insurance protects you if a client makes a claim against your work. It costs £150 to £600 per year depending on your profession. Basic accounting software costs £10 to £25 per month for tools like FreeAgent or QuickBooks. A business bank account costs £0 to £15 per month depending on the provider.
For a sole trader without employees, a realistic year one spend is £300 to £600.
How much does it cost to register a limited company in the UK?
Limited company registration costs £100 online at Companies House. This is the only compulsory government fee at incorporation. Reserving a company name costs £8 per name. Accountant and formation agent fees are separate. Most limited companies spend £100 to £300 in total to get started.
You can register your limited company directly on GOV.UK in around 15 minutes. The £100 fee covers your incorporation certificate and your entry in the Companies House register.
Formation agents charge £30 to £150 to handle registration on your behalf. This is useful if you also want a registered office address service. Most accountants include free company formation with their monthly packages. If you’re signing up for an accountancy service anyway, the £100 fee may be included.
Limited company registration in the UK comes with obligations that start from your incorporation date. Understand these before you register.
What are the ongoing compliance costs for a limited company?
After registration, limited companies have recurring compliance costs. The annual confirmation statement costs £13 online. Corporation tax is due on all profits. Accounting and bookkeeping usually cost £80 to £200 per month on a fixed fee plan. VAT registration is free but becomes mandatory when turnover exceeds £90,000.
These are the recurring costs to plan for:
Annual confirmation statement: £13 online, filed with Companies House each year. It confirms your company’s details are still accurate. Missing it can lead to a fine and strike off.
Annual accounts: There is no filing fee, but accounts must be prepared by an accountant or director. They must be filed with both HMRC and Companies House. Getting this wrong can lead to penalties from both bodies.
Corporation tax: Small companies with profits up to £50,000 pay 19%. Companies with profits above £250,000 pay 25%. A marginal rate applies between those bands. The tax is due nine months and one day after your accounting period ends.
VAT returns: Mandatory when turnover exceeds £90,000. You can register for VAT voluntarily below that threshold to reclaim VAT on your costs. Quarterly VAT returns must be filed digitally under Making Tax Digital rules.
Accountancy: Outsourced accounting services for a small limited company usually cost £80 to £200 per month. This usually covers year end accounts, corporation tax return, payroll, VAT, and director self assessment.
Are business registration and running costs tax deductible?
Most UK business costs are tax deductible when incurred wholly for business purposes. This includes accountancy fees, professional indemnity insurance, and software. Sole traders claim these as expenses on their self assessment return. Limited companies deduct them before calculating corporation tax. Companies House registration fees are also an allowable expense.
The rule for deductibility is simple. Costs must be wholly and exclusively for business purposes. Most of the costs listed in this guide qualify. Software, insurance, accountancy, and bank charges all count.
Knowing which costs you can deduct reduces your real tax bill. For a full list, see tax deductions for limited companies.
Sole traders claim allowable expenses on their self assessment return each January. The more accurately you record your costs during the year, the more you can claim.
How can you keep business registration costs low?
Registering directly with Companies House is the easiest way to cut costs. Online registration takes around 30 minutes and costs £100. Use fixed fee accountancy rather than hourly billing. Factor in the annual confirmation statement (£13 online). Professional support nearly always costs less than the cost of getting compliance wrong.
Three things make the biggest difference to your year one costs:
Do your own registration. Companies House online registration is simple. You do not need an agent. You need your details, a proposed company name, and a registered office address.
Choose fixed fee accountancy early. Hourly billing creates unpredictable costs and discourages you from asking questions. A fixed monthly package is more predictable and usually better value overall.
Understand what is and is not mandatory. Not every business needs VAT registration or a premium registered office on day one. Start with what the law requires. Add the rest as the business grows.
Get in touch if you need help choosing a structure or understanding the running costs.
This article provides general information about business registration costs in the UK. Fees and tax rates were correct in June 2026, but they may change. Consult a qualified accountant before making decisions about your business structure.