What It Actually Costs to Run a UK Company

Forming a limited company in the UK is cheap and takes about ten minutes. Keeping one running is a different question, and the answer is made up of a lot of small obligations that nobody mentions when you're filling in the incorporation form.

None of these are huge on their own. Added together they set a floor under your monthly expenses — the number you type into the runway calculator — and a few of them arrive as unpleasant surprises if you haven't planned for them.

Figures below were taken from GOV.UK and checked in July 2026, and apply to the 2026–27 tax year unless stated. Rates change, usually in April. Each section links to its source so you can confirm before relying on anything here.

Setting up, and the annual floor

Incorporating online costs £100. On paper it's £124, and if you need it done the same day that's £156. Worth knowing these went up on 1 February 2026 — a lot of the advice still floating around quotes £50, which is out of date.

After that there's an unavoidable annual minimum. Every company files a confirmation statement once a year, which costs £50 online (£110 on paper). You also file annual accounts and a Company Tax Return, which cost nothing to submit but do have to be right.

So the pure statutory cost of keeping a dormant-ish company alive is about £50 a year. That's the floor. Everything below is what happens once the company actually does something.

Source: Companies House fees

An accountant

There's no official figure for this, so treat what follows as market observation rather than fact. A small company with straightforward affairs can generally expect to pay somewhere in the low hundreds to low thousands per year for year-end accounts and a Corporation Tax return, with payroll and VAT returns usually charged on top or bundled into a monthly fee.

You're not legally required to use one. Whether it's worth it usually comes down to whether your time is better spent elsewhere, and whether you'd catch things like an R&D claim you're eligible for — which, as covered in the funding guide, can be worth considerably more than the fee.

Corporation Tax

If you're pre-profit this costs you nothing, which is why founders often ignore it until it suddenly matters. The rates:

• Profits of £50,000 or less — the small profits rate, 19%
• Profits over £250,000 — the main rate, 25%
• Between the two — Marginal Relief tapers you from one to the other

One detail that catches people: those thresholds are divided by the number of associated companies you have. If you've set up a second company for something, you may have quietly halved the point at which the higher rate kicks in.

Source: GOV.UK — Corporation Tax rates

VAT, and the £90,000 cliff edge

You must register for VAT once your taxable turnover for the last 12 months goes over £90,000, or as soon as you expect to cross it within the next 30 days.

The rolling-12-month part is what trips people up. It isn't your financial year — it's any twelve consecutive months, checked continuously. A good quarter can push you over without you noticing.

The timing rules are specific. If you cross the threshold, you have until 30 days after the end of that month to register, and your registration takes effect from the first day of the second month after you went over. Register late and you owe VAT on sales going back to the date you should have registered — plus a possible penalty. That's a genuinely painful bill to receive after the fact.

If you sell to businesses who reclaim VAT anyway, registering voluntarily before you hit the threshold can be worth it, because you can reclaim VAT on your own costs. If you sell to consumers, registering effectively means a 20% price rise or a 20% margin cut. Which of those two situations you're in should drive the decision.

Source: GOV.UK — Register for VAT

The moment you hire someone

This is where costs step up sharply, and where the gap between the salary you agreed and the money leaving your account is widest.

On top of NI there's the workplace pension. Auto-enrolment obliges you to contribute a minimum of 3% of qualifying earnings for eligible staff. And if you're hiring at the lower end, the National Living Wage for workers aged 21 and over is £12.71 an hour from April 2026 — roughly £24,800 a year on a 37.5-hour week, or about £26,400 on a 40-hour week, before any of the above.

There's also Statutory Sick Pay to budget for, at £123.25 a week (or 80% of average weekly earnings if lower), and unlike maternity and paternity pay you cannot reclaim any of it from HMRC.

Add it up and a salary of £40,000 realistically costs you somewhere north of £45,000 once NI and pension are included, before you've bought them a laptop. The rough planning rule of salary × 1.2 is a reasonable starting point, though Employment Allowance can pull it back down.

Source: HMRC — Rates and thresholds for employers 2026 to 2027

Insurance and the software stack

The moment you have employees, employers' liability insurance stops being optional — it's a legal requirement, and the fines for going without are not trivial. Professional indemnity isn't required by law but many B2B customers will ask for it before signing, so in practice it often becomes a cost of selling.

Then there's software, which is the category that quietly grows without anyone deciding it should. Accounting, payroll, email, code hosting, cloud, error monitoring, design tools, a CRM once you have customers. Individually all reasonable; collectively a meaningful line item, and per-seat pricing means it scales with headcount whether or not people use it.

This is the area with the most slack in it, which is why it's the first place worth looking when you need to stretch your runway.

Putting it in your burn rate

The practical takeaway is that these costs are lumpy rather than smooth. Corporation Tax arrives as one payment nine months after your year end. VAT lands quarterly. The confirmation statement is annual. If you only track the monthly subscriptions, your burn rate will look flatteringly low for most of the year and then bite.

The fix is unglamorous: divide the annual and quarterly items by twelve and include them in your monthly expenses figure. Your runway number will get slightly worse and considerably more honest, which is the whole point of calculating it.

A closing caveat, same as everywhere else on this site. I'm a developer, not an accountant. The figures above come straight from GOV.UK and were correct in July 2026, but your specific circumstances — associated companies, sector rules, Employment Allowance eligibility — can change the answer. Check the linked sources, and talk to someone qualified before making a decision that depends on any of it.