Companies House is regarded as one of the most efficient company registers in the world: a private limited company is registered online for £100, usually within 24 hours and without a notary. English law serves internationally as the basis for countless contracts, and London is one of the largest financial centres in the world. For company formation in the UK, there is a choice of legal forms that differ fundamentally in liability, taxation and purpose.
Corporation tax: the bands
Since April 2023, the United Kingdom has applied corporation tax in bands according to the level of profit. Profits up to £50,000 are taxed at the small profits rate of 19%, profits above £250,000 at the main rate of 25%. In between, the main rate is applied first and then reduced by marginal relief, so that the overall burden rises gradually from 19% to 25%:
| Taxable profit | Rate | Overall burden |
|---|---|---|
| up to £50,000 | 19% | 19% |
| £50,001 to £250,000 | 25% less marginal relief | rises from 19% to 25% |
| above £250,000 | 25% | 25% |
As a result of these bands, the marginal rate on profits between £50,000 and £250,000 is 26.5%. If a company has associated companies, both thresholds are divided by their number. The United Kingdom levies no withholding tax on dividends to shareholders. The government publishes the current rates and a marginal relief calculator on its page on corporation tax rates.
All legal forms compared
UK company law knows four types of company under the Companies Act 2006: the private company limited by shares, the private company limited by guarantee, the private unlimited company and the public limited company. In addition, there are two forms of partnership with limited liability which, despite similar names, are fundamentally different. The most important legal forms compared:
| RecommendedLtd | Limited by Guarantee | plc | LLP | Limited Partnership | |
|---|---|---|---|---|---|
| Type | Company | Company without shares | Company | Partnership with legal personality | Partnership |
| Liability | Limited | To the guarantee | Limited | Limited | Partly |
| Minimum capital | None (from £1) | None | £50,000 | None | None |
| Taxation | 19–25% corporation tax | 19–25% corporation tax | 19–25% corporation tax | Transparent at member level | Transparent at partner level |
| Profit distribution | Dividends | None | Dividends | Profit share | Profit share |
| Public offer of shares | No | No | Yes | No | No |
| Ideal for | SMEs, online businesses, holdings | Charities, clubs, associations | Investors, IPO | Law firms, consultancies | Funds, investments |
The limited liability partnership (LLP) under the LLP Act 2000 is a separate legal entity whose members all have limited liability; it is registered with Companies House and files annual accounts like a company, but is taxed as a partnership. The limited partnership (LP) under the Limited Partnerships Act 1907, by contrast, has no separate legal personality in England and Wales: at least one general partner has unlimited liability, the limited partners only up to their contribution. The LP is therefore widely used for investment funds, the LLP for law firms and consultancies.
There is also the private unlimited company, a company whose members have unlimited liability and which, under certain conditions, need not publish its annual accounts; it is used mainly for asset and group structures. The simple partnership and the sole trader are not separate legal persons – the owners are personally and fully liable.
The guarantee company
A company limited by guarantee has neither shares nor shareholders. Instead, it has members who undertake in the articles to contribute a fixed amount in the event of liquidation – usually £1 in practice. Beyond that they are not liable. Profits may not be distributed to members but serve exclusively the company’s purpose.
This legal form is common among organisations centred on membership rather than capital: charities and foundations, clubs and societies, professional and trade associations, and residents‘ management companies. Many British charities are set up as companies limited by guarantee and are also registered with the Charity Commission.
Two features matter in practice: if the company promotes commerce, art, science, education, religion, charity or a profession and its articles prohibit distributions, it may omit “Limited” from its name. For tax purposes it is in principle subject to corporation tax; recognised charities, however, benefit from extensive exemptions.
The plc for investors
The public limited company is the only UK legal form allowed to offer its shares to the public. It is therefore a prerequisite for a stock market listing – on the Main Market of the London Stock Exchange as well as on the AIM growth market – and for any capital raised through a public offer.
The requirements are considerably higher than for a Ltd:
| Requirement | plc | Ltd |
|---|---|---|
| Allotted share capital | at least £50,000, a quarter paid up | no minimum capital |
| Start of business | only with a trading certificate from Companies House | immediately after incorporation |
| Directors | at least two | at least one |
| Company secretary | mandatory, with proven qualifications | optional |
| General meeting | annual meeting mandatory | not required |
| Annual accounts | within six months | within nine months |
An existing Ltd can be re-registered as a plc at any time once it meets the capital and governance requirements. Anyone who wants to set up a company in the UK and later raise capital on the market therefore often starts with a Ltd and converts shortly before a funding round or an IPO.
The formation process
Company formation in the UK is a particularly fast process with these steps:
- Choose the legal form and name: The name must be available and, for a Ltd, end in “Limited” or “Ltd”.
- Verify identity: Since November 2025, all directors and persons with significant control must verify their identity with Companies House.
- Registered office: The company needs an address in the United Kingdom; it appears on the public register.
- Online incorporation: via the Companies House incorporation service for £100, usually within one day.
- Tax registration: registration for corporation tax within three months of starting business.
Incorporation itself is therefore usually completed in a single day; the Ltd can then be run entirely from abroad.
Accounting and obligations
The key obligations for bookkeeping, accounts, audit and VAT at a glance – so you know from the start what running your company involves.
| Obligation | Rule |
|---|---|
| Bookkeeping | Under UK GAAP or IFRS |
| Annual accounts | Annually with Companies House, within nine months of year-end |
| Statutory audit | Exempt as a small company (2 of 3: turnover up to £15m, assets up to £7.5m, up to 50 staff) |
| Tax return | Corporation tax return (CT600) within twelve months; payment after nine months and one day |
| VAT: registration | From £90,000 taxable turnover; rate 20% |
| VAT: returns | Quarterly, digitally via Making Tax Digital |
| Ongoing register duties | Annual confirmation statement (£50); director identity verification |
As of 2026. Bookkeeping and filings are usually handled by specialised accountants in the target country.
Is the United Kingdom right for you?
Whether the United Kingdom suits you depends mainly on where your clients and investors are based:
Suitable for
- Companies with clients in the UK and the US
- Founders looking for a globally recognised legal form
- Non-profit organisations as Limited by Guarantee
- Growth companies planning for investors or an IPO
Less suitable for
- Businesses that depend on the EU single market
- Founders expecting tax below 19%
- Micro-businesses that do not want public accounts
- Traders with warehouses and customers solely in the EU
For an English-speaking company within the EU, Ireland with 12.5% is an alternative; if you mainly sell in the US, compare the US LLC. The overview of all locations shows every option, and the tax comparison the rates. Which structure fits in an individual case can be clarified in an initial call.
