- The core costs of running a limited company in the UK include accountancy fees, the Companies House confirmation statement, a registered office address, and corporation tax filing, which together typically total between £1,500 and £3,000 in year one.
- Accountancy is usually the single largest running cost, with specialist limited company accountants charging between £1,200 and £1,800 per year for a full-service package.
- Many of the costs of running a limited company are tax-deductible business expenses, which reduces their real impact on your take-home pay.
The cost of running a limited company in the UK typically ranges from £1,500 to £3,000 in year one, once you account for accountancy, compliance, and filing fees. If you are weighing up whether to incorporate, understanding the full picture before you commit is essential. Sleek’s limited company accounting service gives you a fixed monthly fee that covers the core of it.
Running a limited company comes with a set of recurring annual costs that every director needs to budget for. Some are fixed and predictable. Others depend on your turnover, whether you register for VAT, and how much support you need from an accountant.
What are the ongoing costs of running a limited company?
The main recurring costs of running a limited company fall into a few clear categories. Most are unavoidable regardless of your turnover or sector, and knowing what to expect helps you budget accurately from day one.
|
Cost |
Typical annual range |
|
Accountancy fees |
£1,200 to £1,800 |
|
Confirmation statement |
£50 |
|
Registered office address |
£50 to £150 |
|
Business bank account |
£0 to £150 |
|
Corporation tax filing |
Included in most accountancy packages |
|
VAT returns |
£0 (DIY) or included in accountancy fee |
|
Business insurance |
£100 to £500+ |
|
Estimated year-one total |
£1,500 to £3,000+ |
These figures cover the essentials for a straightforward small limited company. Your actual costs will depend on your turnover, whether you need to register for VAT, and the level of accountancy support you choose.
How much do accountancy fees cost for a limited company?
Accountancy is almost always the largest single running cost. A specialist limited company accountant typically charges between £1,200 and £1,800 per year for a full-service package. This usually covers your annual accounts, corporation tax return, payroll, and self-assessment.
Some accountants charge per task instead of a fixed annual or monthly fee. This can work out cheaper if your needs are very simple, but costs can quickly add up if you need regular help.
It is worth knowing that your self-assessment tax return is a personal expense and cannot be reclaimed from the company, even if your accountant prepares it as part of your package. Check what is and is not included before you sign up.
For a broader look at what you can legitimately put through your company, our online accounting guide covers how to manage your finances efficiently as a limited company director.
How much does the Companies House confirmation statement cost?
Every limited company must file a confirmation statement at least once per year. It confirms that your registered details at Companies House are current and accurate.
The fee is £50 for online submission. Paper filing costs £110 and is rarely necessary. Many accountants absorb this into their annual fee, so it is worth checking whether yours does before paying separately.
If you miss the filing deadline, your company can be struck off the register. It is a small cost but an important deadline to track.
Registered office address costs
Every limited company needs a registered office address. This is the official address that appears on the public Companies House register and receives correspondence from HMRC and Companies House.
You can use your home address, but many directors choose not to for privacy reasons. A professional registered office service typically costs between £50 and £150 per year and keeps your home address off the public record.
It is worth setting this up from the moment you incorporate. Removing a home address after the fact is possible but requires a separate application and is an avoidable hassle.
Does a limited company need a business bank account?
Yes, and this is non-negotiable. A limited company is a separate legal entity from its director, which means it must have its own dedicated bank account. Using a personal account for company transactions is not permitted and can create serious problems with HMRC.
The good news is that several providers now offer free business accounts. Starling, Monzo Business, and Tide are popular options among small company owners. Traditional high street banks tend to charge between £5 and £12.50 per month, often after a free introductory period.
When comparing accounts, look beyond the headline monthly fee. Transaction charges, international payment costs, and what happens after any free period ends all affect the real cost.
How much does corporation tax cost a limited company?
Corporation tax is not a fixed running cost. It is calculated as a percentage of your company’s taxable profits, so the amount varies year to year.
The current rates are:
- 19% on profits up to £50,000
- 25% on profits above £250,000
- A tapered marginal rate applies for profits between £50,000 and £250,000
What does have a fixed cost is the preparation and filing of your corporation tax return. This is usually included in a full accountancy package. If you file late, HMRC issues an automatic £100 penalty, rising significantly for delays beyond three months.
Your corporation tax payment is due nine months and one day after your accounting period ends. Our guide to what is the corporation tax rate explains the current rates and how they apply to your profits.
If your company makes a loss in year one, you will not owe corporation tax. However, you still need to file a return. Missing the filing deadline triggers penalties regardless of whether tax is owed.
What does VAT registration cost for a limited company?
VAT registration is free. You are legally required to register once your taxable turnover exceeds £90,000 in a rolling 12-month period. You can also register voluntarily below that threshold, which allows you to reclaim VAT on eligible business purchases.
Once registered, you will need to submit VAT returns, usually quarterly, through HMRC’s Making Tax Digital system. Most accountancy packages include VAT return preparation. If you handle it yourself, the main cost is your time.
Choosing the right VAT scheme can make a meaningful difference to your cash flow. Our VAT flat rate scheme vs standard scheme guide explains how each one works and which suits different types of business.
What business insurance does a limited company need?
Insurance requirements depend on your sector, your clients, and whether you employ anyone. Some policies are a legal requirement. Others are contractually required by clients. Some are simply good practice.
Here is a breakdown of the most common policies for limited company directors:
- Employers’ liability insurance: A legal requirement if you employ anyone other than yourself. Fines can reach £2,500 per day without it.
- Professional indemnity insurance: Covers claims of negligence or inadequate work. Often required by contracts, particularly for consultants and contractors.
- Public liability insurance: Covers claims from third parties for injury or property damage. Important if you work on client premises or deal with the public.
- Tax investigation insurance: Covers your accountancy costs if HMRC opens a compliance check into your company.
Costs vary significantly depending on your profession and the level of cover you need. For most small limited companies, budgeting £100 to £500 per year covers the essentials.
Which limited company running costs are tax deductible?
This is where the picture becomes more positive. Many of the costs above qualify as allowable business expenses, which means they reduce your taxable profits and lower your corporation tax bill.
Expenses that are typically deductible include accountancy and professional fees, registered office address services, business insurance premiums, bank charges, and software or subscriptions used for work purposes.
Personal costs cannot be claimed through the company. Your self-assessment return, personal mobile phone contract, and commuting costs are common examples of expenses that directors mistakenly try to put through the business. Getting this wrong can trigger penalties on a compliance review.
For a full breakdown of what HMRC expects from limited company directors, our directors tax return guide is a good starting point.
How Sleek helps with the cost of running a limited company
Managing limited company costs is straightforward when you have the right support in place. The real risk for most founders is not the individual fees. It is missing deadlines, filing incorrectly, or paying for services you do not need.
Sleek gives limited company directors a fixed monthly fee that covers annual accounts, corporation tax filing, and self-assessment. Everything is handled in one place, with no year-end surprises and no chasing deadlines yourself.
Disclaimer: The preceding information is not legal advice. This content is aimed to provide general guidance. For more formal or legal advice, contact Sleek directly.
450,000
businesses worldwide.
from 4,100+ reviews.
satisfaction rate from
16,000 surveyed clients.
FAQs on cost of running a limited company
Can I run a limited company without an accountant?
Yes, there is no legal requirement to use an accountant. You can file your own accounts, corporation tax return, and confirmation statement directly with HMRC and Companies House. However, mistakes can result in penalties and an unexpected tax bill. For most directors, the cost of a specialist accountant is outweighed by the time saved and errors avoided, particularly in year one when you are still learning the compliance requirements.
How much does it cost to close a limited company?
Voluntary dissolution via a DS01 form costs £33 if done online. This is the cheapest route and suits companies with no outstanding debts or liabilities. If your company has significant retained profits, a members’ voluntary liquidation is more tax efficient but typically costs between £1,500 and £3,000 in professional fees. The right option depends on your company’s financial position at the point of closure.
Do I pay myself a salary as a limited company director and what does that cost?
Most directors pay themselves a small salary up to the National Insurance threshold, currently £9,100 per year, and top up their income with dividends. This minimises National Insurance contributions for both the company and the director. If you run payroll yourself it is free, but most accountants include basic director payroll within their standard package. Additional employees will increase your payroll administration costs.
What happens if I don’t file my accounts on time?
Late filing of your annual accounts triggers an automatic penalty from Companies House. The fine starts at £150 for private companies up to one month late and rises to £1,500 for delays of more than six months. HMRC also charges separate penalties for late corporation tax returns. Persistent late filing can result in your company being struck off the register entirely.
Is a limited company more expensive to run than being a sole trader?
Yes, the running costs of a limited company are higher than those of a sole trader. A sole trader has no Companies House fees, no confirmation statement, and simpler accounting requirements. However, a limited company can be significantly more tax efficient above a certain income level, and the limited liability protection is a meaningful benefit. Most accountants suggest incorporation becomes worthwhile around £30,000 to £50,000 in annual profit.
View more
Can I reclaim VAT on my limited company running costs?
If your company is VAT registered, you can reclaim VAT on most business expenses, including accountancy fees, software, and office costs. You cannot reclaim VAT on business entertainment or personal expenses put through the company. Voluntary VAT registration can therefore reduce your net running costs if your suppliers are VAT registered, even if your own turnover is below the £90,000 threshold. Our guide to VAT registration for limited companies explains the key rules.
How much should I budget for limited company costs in year one?
A realistic year-one budget for a straightforward limited company is between £1,500 and £3,000, covering accountancy fees, the confirmation statement, a registered office address, and a business bank account. If you need to register for VAT, take out professional indemnity insurance, or set up payroll for employees, costs will be higher. Many of these expenses are tax deductible, which reduces their real impact on your take-home pay.
