Published by Westridge Accountants | Quality, Affordability & Convenience
Starting a limited company is one of the most important decisions you’ll make as a business owner. Done right, it can reduce your tax bill, protect your personal assets, and give your business a more professional image. This guide walks you through everything you need to know — from registration to your first tax obligations.
Why Set Up a Limited Company?
There are three main reasons people choose to incorporate:
Tax efficiency. As a sole trader, all your profits are subject to Income Tax and National Insurance. Inside a limited company, profits are taxed at Corporation Tax rates (19–25%), which are lower. You can then draw a salary and dividends in a tax-efficient combination — potentially saving thousands each year.
Limited liability. A limited company is a separate legal entity. If the business runs into financial difficulty, your personal assets (home, savings) are generally protected — unlike as a sole trader, where you are personally liable for all business debts.
Credibility. Many larger clients, contractors, and suppliers prefer to work with limited companies. Being registered at Companies House signals stability and professionalism.
How to Register a Limited Company
Registering a company in the UK is straightforward and can be done online via Companies House. You’ll need:
- A unique company name (you can check availability on the Companies House website)
- A registered office address in the UK (this will be publicly visible)
- At least one director (must be 16 or over)
- Details of shareholders and their share allocation
- A SIC code (the code that describes your business activity)
- Details of all Persons with Significant Control (PSC) — usually the director/shareholders
Registration costs £50 online (as of 2025) and is usually approved within 24 hours. Westridge Accountants can handle the entire registration process on your behalf, including choosing the right share structure from the outset.
Choosing a Company Name
Your company name must be unique and cannot be the same as — or too similar to — an existing registered company. It must end in “Limited” or “Ltd”. Certain words (like “Royal”, “Bank”, “Institute”) require special permission to use.
Bear in mind that your registered company name and your trading name can be different — many businesses trade under a different brand while the legal entity has a more generic name.
Your Tax Obligations After Incorporation
Once your company is registered, you have a number of ongoing obligations:
Corporation Tax. Your company must pay Corporation Tax on its taxable profits. The current rates are 19% for profits up to £50,000 and 25% for profits over £250,000, with marginal relief in between. You must register with HMRC for Corporation Tax within 3 months of starting to trade.
Annual accounts. Every year, you must prepare statutory accounts and file them with Companies House. These must also be submitted to HMRC as part of your Corporation Tax return (CT600). The deadline is 12 months after your accounting year end.
Confirmation Statement. Once a year, you must file a Confirmation Statement with Companies House confirming your company’s details are correct. This is not the same as the annual accounts — it’s a separate filing.
PAYE. If you pay yourself a salary (as most directors do), you must register as an employer with HMRC and operate PAYE. This involves running payroll, submitting RTI (Real Time Information) reports to HMRC each time you pay yourself, and filing an annual P60.
VAT. If your taxable turnover exceeds £90,000 in a 12-month period, you must register for VAT. You may also choose to register voluntarily below this threshold — which can be beneficial if your customers are VAT-registered businesses.
Personal Self Assessment. As a director, you must file a personal Self Assessment tax return each year, even if all your income is salary through PAYE. This is how dividends are declared and taxed.
Key Deadlines for Limited Companies
| Obligation | Deadline |
|---|---|
| Register for Corporation Tax | Within 3 months of starting to trade |
| File Corporation Tax return (CT600) | 12 months after accounting year end |
| Pay Corporation Tax | 9 months and 1 day after year end |
| File accounts at Companies House | 9 months after year end (private companies) |
| File Confirmation Statement | Within 14 days of your review date (annually) |
| Personal Self Assessment | 31 January (online filing) |
What Does It Cost to Run a Limited Company?
Running a limited company does involve more administration than being a sole trader, and therefore more accountancy fees. However, for most people earning over £30,000–£35,000 in profit, the tax savings more than cover the extra costs.
Typical annual accountancy costs for a small limited company include: preparation of statutory accounts, Corporation Tax return (CT600), director’s payroll, personal Self Assessment return, and Confirmation Statement. At Westridge Accountants, we offer transparent fixed-fee packages covering all of these.
How Westridge Accountants Can Help
We handle the entire process for new company formations and ongoing compliance, including Companies House registration, HMRC registrations (Corporation Tax, PAYE, VAT), preparation of annual accounts and CT600, director payroll, personal Self Assessment returns, and Confirmation Statements.
We also advise on the optimal salary and dividend structure from day one, so you’re as tax-efficient as possible right from the start.
Thinking about setting up a limited company? Contact us at info@westridgeaccountants.co.uk or visit www.westridgeaccountants.co.uk. We’re available 7 days a week, 8am to 10pm.
This article is for general guidance only and does not constitute personalised tax advice. Tax rules can change and individual circumstances vary. Please contact Westridge Accountants for advice tailored to your specific situation. Westridge Accountants Ltd is regulated by AAT and supervised by AAT for Anti-Money Laundering purposes.
Frequently Asked Questions
How much does it cost to register a limited company in the UK?
Registering directly with Companies House costs £50 online. Many formation agents charge similar fees. Additional costs include a registered office address if needed, accountancy fees, and professional advice. Westridge Accountants can handle company formation as part of our new business service.
What is the difference between a director and a shareholder?
A director manages and runs the company day-to-day and is legally responsible for filing accounts and tax returns. A shareholder owns part of the company through shares and receives dividends from profits. In small companies, the same person is usually both — but they are distinct legal roles with different obligations.
Do I need to register for VAT when I start a limited company?
You must register for VAT once your taxable turnover exceeds £90,000 in any rolling 12-month period. You can also register voluntarily below this threshold if your customers are VAT-registered or you have significant input VAT on costs.
When is my limited company’s first Corporation Tax return due?
Your Corporation Tax return (CT600) is due 12 months after your company’s accounting year end. The Corporation Tax payment itself is due 9 months and 1 day after the year end. For example, if your first year ends 31 March 2026, payment is due 1 January 2027 and the return by 31 March 2027.
Does a limited company need to file accounts at Companies House?
Yes. All limited companies must file annual statutory accounts at Companies House regardless of size or turnover. Accounts are due 9 months after the year end. Late filing attracts automatic penalties starting at £150.
