Starting a Business in

United Kingdom

Below is a detailed summary of the bureaucratic and legal hurdles faced by entrepreneurs wishing to incorporate and register a new firm in United Kingdom. It examines the procedures, time and cost involved in launching a commercial or industrial firm with between 10 and 50 employees and start-up capital of 10 times the economy's per-capita gross national income.

This information was collected as part of the Doing Business project, which measures and compares regulations relevant to the life cycle of a small- to medium-sized domestic business in 190 economies. The most recent round of data collection was completed in June 2016.

Compare United Kingdom to 189 other economies.

  • No. Procedure Time to Complete Associated Costs

    Check availability of unique company name, complete application form IN01, and file for registration with Companies House

    Agency: Companies House

    Company founders have the option to check for unique company name and file for registration themselves, or to retain incorporation professionals to do so. The option to complete registration is through paper application or electronically.

    In case the company chooses to file for incorporation itself online, model articles of incorporation and company memorandum are generated automatically by the registration website www.gov.uk/register-a-company-online. In addition the above forms, all companies must provide the following information to the relevant Registrar of Companies (i.e., for England and Wales, Scotland, or Northern Ireland):

    • Statement of compliance with all requirements of the 2006 Companies Act;
    • Application form IN01, which includes:
    o proposed company name;
    o country of registration office (e.g. England and Wales (or Wales), Scotland or Northern Ireland);
    o Whether the liability of the members is to be limited and if so whether by shares or guarantee; and;
    o Whether the company is public or private;
    • In the case of a company with a share capital, the application must also include a statement of the capital and initial shareholdings, including the name and address of the subscriber.
    • A statement of the proposed officers, being the first director and company secretary (unless in the case of a private company, where the appointment of a company secretary is optional);  
    • A statement of the intended registered office address.

    On completing the online form if the company name provided cannot be used the website will alert you to this and you have the option of selecting another name. Fees for filing incorporation documents are as follows: GBP 15 for a Web filed incorporation and GBP 40 for paper filers (or GBP 100 for a same day service). The standard digital registration fee through a third party agent is GBP 13 (or GBP 30 for a same day service). There is no requirement for a company to use a third party agent. Third party agents may charge additional fees as well as the standard registration fee.
    In case the company chooses to retain incorporation agents to file for registration, in addition to the above documents, the application file must include the agents’ name and address. Note that in case the company wants to amend model articles of association or company memorandum it cannot file for registration online via www.gov.uk/register-a-company-online. Instead, the company must use professionals to compose incorporation documents and submit them via specialized software to Companies House.

    Registration is typically completed within a few hours.

    Less than one day (online procedure) GBP 15 for online registration

    Contact HMRC and register for VAT

    Agency: HMRC

    A business will need to register for VAT if its taxable goods and services supplied within the UK for the previous 12 months is more than the current registration threshold of £83,000 (as of April 2016) or the business expects it to go over that figure in the next 30 days alone, it must register for VAT. However, the business may also voluntarily choose to register for VAT if its VAT taxable goods fall under the £83,000 threshold.

    Most businesses, including Limited Companies, can register for VAT account online at: https://online.hmrc.gov.uk/registration or send paper forms through the post. Most applications for VAT registration can be completed online but there are some circumstances where a business has to apply by post. To register online for VAT or use other VAT online services, a business will first need to sign up for HMRC Online Services or the Government Gateway.

    Less than one day (online procedure) no charge
    * 3

    Contact HMRC and register for PAYE

    Agency: HMRC

    The company must contact the HMRC to set up a contribution scheme for national insurance and pay-as-you-earn (PAYE) tax, which deducts tax from employee wages or salary. The company will be issued with an activation PIN within 5 business days – typically less - and will have to activate this PIN within 28 days (or else request a new PIN). The company will use the PIN to register and enroll online. For security reasons, a check is run on the data provided. A small percentage of registrations who fail the security check can take longer. Otherwise, activation is instant.

    Since 6 April 2013, companies will need to report their PAYE in real time. This means that companies must either report online or require their accountants to submit reports every time they pay their employees.    

    3 days, simultaneous with previous procedure no charge

    Sign up for employer’s liability insurance

    Agency: Insurance company

    The Employers’ Liability (Compulsory Insurance) Act of 1969 requires all employers in the United Kingdom to maintain employers’ liability insurance from an approved insurance company. The minimum legal requirement for employers’ liability insurance is a limit of indemnity of GBP 5,000,000. In addition, a fine of GBP 2,500 per day can be imposed if employer's liability insurance is not taken out.

    The Employers’ Liability (Compulsory Insurance) Act of 1969 requires that proof of insurance be posted at the workplace. Since October 1, 2008, it is possible to display this information electronically, although a company that wishes to do this will need to ensure that its employees know how and where to find the certificate and have reasonable access to it.

    1 day no charge

    * Takes place simultaneously with previous procedure.