Setting up a limited company in the UK has never been more accessible — or more important to do correctly. New identity verification requirements, changes to how Companies House processes applications, and a growing number of international founders choosing the UK mean the process has evolved significantly in 2025 and 2026. This guide covers everything: company formation, registered addresses, identity verification, VAT registration, and what to do the moment your certificate arrives.

Why set up a limited company and not a sole trader?

Most people choosing how to structure a new UK business are weighing a limited company against operating as a sole trader. Both are legitimate options, but for the majority of founders — particularly those with meaningful revenue, external clients, or plans to grow — a limited company is the stronger choice on almost every dimension.

The tax efficiency is compelling. As a sole trader, all profit is subject to Income Tax at up to 45%. A limited company pays Corporation Tax at 19% on profits up to £50,000. A founder-director can then structure their income as a combination of salary and dividends, reducing their effective personal tax rate substantially compared to employment income or sole trader profits.

What you need before you start

Company formation in the UK is genuinely straightforward, but gathering the right information before you begin makes the process much faster. Have the following ready:

• Company name — must be unique on Companies House and end in "Limited" or "Ltd". Check availability at the Companies House name checker.
• UK registered office address — where official Companies House and HMRC correspondence is sent. Must be a physical UK address. A virtual address from 1Office satisfies this requirement.
• Director details — full name, date of birth, nationality, residential address, and occupation. Directors must be 16 or older. No UK residency required.
• Shareholder details — name, address, and number of shares. Can be the same person as the director.
• SIC code — the Standard Industrial Classification code describing your business activity. 1Office helps you select the right one.
• Share structure — most common for a single founder: 100 ordinary shares at £1 nominal value each.
• Identity document — a valid passport or UK driving licence, needed for Companies House identity verification, mandatory since 2025.

The 7 steps to set up a limited company in 2026

• 1

  Choose and check your company name

  Your name must be unique on the Companies House register and cannot be too similar to an existing company. It must end in "Limited" or "Ltd". Certain sensitive words require special permission to use. Run the name check before committing.

• 2

  Secure a UK registered office address

  Every UK limited company must have a registered office at a physical UK address. This appears on the public Companies House register. If you work from home or are not UK-based, a virtual business address from 1Office provides a professional London address and keeps your personal address private.

• 3

  Appoint directors and shareholders

  A UK limited company needs at least one director (who must be a natural person) and at least one shareholder. Neither needs to be UK-resident. Confirm the share structure — for most single founders, 100 shares at £1 each is the standard starting point.

• 4

  Complete Companies House identity verification

  Since 2025, all directors and persons with significant control (PSCs) must verify their identity with Companies House before or at the point of incorporation. This can be done directly via GOV.UK One Login, or through a registered Authorised Corporate Service Provider (ACSP), which lets identity verification happen as part of the formation process itself with no separate step.

• 5

  File your application with Companies House

  The formation application (form IN01) includes your Memorandum and Articles of Association. Filing via a formation agent who uses the Companies House API, as 1Office does, typically results in incorporation the same working day. The state registration fee is £100, included in 1Office packages.

• 6

  Register for Corporation Tax with HMRC

  Companies House automatically notifies HMRC when your company is incorporated. You will receive a Unique Taxpayer Reference (UTR) by post to your registered office within 10 to 14 days. You must register for Corporation Tax within 3 months of starting to trade, not within 3 months of incorporation.

• 7

  Open a business bank account

  Keep company and personal finances completely separate from day one. Wise Business and Revolut Business are the most popular options for international founders — fully online, multi-currency, and quick to open with a UK registration number. Traditional banks are also available but have slower onboarding for non-residents.

Companies House identity verification: what changed in 2025

One of the most significant changes to UK company formation in recent years is the introduction of mandatory identity verification under the Economic Crime and Corporate Transparency Act 2023. From 2025, all directors and persons with significant control (PSCs) must verify their identity with Companies House, both for new formations and existing companies.

Who needs to verify?

• All directors of UK limited companies, including non-UK residents
• All persons with significant control, typically anyone owning 25% or more of shares or voting rights
• Anyone filing documents with Companies House on behalf of a company

Two ways to verify

1. Directly via GOV.UK One Login — using a valid passport or UK driving licence, plus a facial recognition check. Fully online, no in-person visit required.

2. Through a registered Authorised Corporate Service Provider (ACSP) — a formation agent like 1Office can verify your identity as part of the company formation process. One seamless flow, no separate GOV.UK account needed. Particularly useful for non-UK residents who do not have a UK driving licence.

What documents do you need?

Either a valid passport (any nationality) or a UK photocard driving licence. If verifying through 1Office, the process is a document upload and a short digital check — no solicitor, no notary, no post.

Virtual business address: what it is and do you need one?

Every UK limited company must have a registered office address — a real, physical UK address where official correspondence can be delivered. What many founders do not realise is that this does not need to be where you actually work, and it certainly does not need to be your home address.

Why founders use a virtual business address

• Privacy — Your registered office address appears on the public Companies House register. Using a professional address keeps your home address completely off the public record.
• Credibility — A London business address signals professionalism to clients, partners and banks, particularly valuable for home-based founders or those outside the UK.
• Legal compliance — Non-UK residents are required to have a UK registered office. A virtual address service satisfies this requirement without the cost of physical office space.
• Mail handling — Official correspondence from HMRC and Companies House is received, scanned and forwarded, wherever you are.
• Director's service address — You can also use a virtual address as your director's service address, keeping your personal address private across all public registers.

1Office provides a London virtual business address as part of all company formation packages, and as a standalone service for companies already incorporated.

VAT registration: when your UK company needs to register

VAT registration is one of the most frequently misunderstood obligations for new UK limited companies. Here is a clear breakdown.

When it is mandatory

You must register for VAT when your UK taxable turnover exceeds £90,000 in any rolling 12-month period. You must also register if you reasonably expect to exceed this threshold in the next 30 days. Once registered, you charge VAT on your sales, file quarterly VAT returns, and can reclaim VAT on business purchases.

When voluntary registration makes sense

• Most of your clients are VAT-registered businesses — they reclaim the VAT you charge, so it costs them nothing, and you can reclaim VAT on your own purchases.
• You have significant business expenses with VAT charged on them — equipment, software, professional services.
• A VAT number signals credibility and scale to larger clients and procurement teams.
• You are planning rapid growth and want the systems in place before you are forced to register under pressure.

Setting up a UK limited company as a non-resident

One of the most common questions we receive is whether a non-UK resident can set up a UK limited company. The answer is unambiguously yes, and it is something thousands of international founders do every year.

UK company law places no restrictions on the nationality or residency of directors or shareholders. Founders from over 80 countries have registered UK companies through 1Office alone, from Ukraine and India to Nigeria, Kazakhstan, and the UAE.

What non-residents need

• A UK registered office address — provided by 1Office as part of every formation package
• Identity verification — completed via passport and digital check through 1Office as your ACSP, no UK visit required
• A business bank account — Wise Business or Revolut Business are the most practical options for non-residents; no UK address needed to open either

Ongoing obligations are identical to UK residents

Once incorporated, the legal obligations are the same: annual Confirmation Statement, annual accounts, and a Corporation Tax return to HMRC. 1Office accounting packages cover all of these remotely — you never need to set foot in the UK to run a fully compliant UK limited company.

Your first 30 days after incorporation

Your Certificate of Incorporation is the beginning, not the end. Here is what to action in the first month.

• Open a business bank account — have your Certificate of Incorporation and company registration number ready. Wise Business and Revolut Business are fastest for non-residents; traditional banks take longer.
• Register for Corporation Tax — notify HMRC you have started trading if you have not already. You have 3 months from your trading start date.
• Set up bookkeeping from day one — record every income and expense from the first transaction. Mixing personal and company finances is the single most common accounting mistake new founders make.
• Consider VAT registration — voluntary registration may make sense even if you are well below the £90,000 threshold.
• Note your Confirmation Statement deadline — due annually from your incorporation date. £50 filing fee. Missing it triggers automatic Companies House fines.
• Note your first accounts deadline — first accounts are due 21 months after incorporation; thereafter, 9 months after your financial year end.
• Get professional indemnity or liability insurance — requirements vary by industry but worth reviewing early, particularly if working with clients.

Frequently asked questions