How to Register a Business in the UK: Step-by-Step Guide for 2026

Mosster Services Limited

• February 5, 2026
• 7 min read
• Starting a Business

Short answer: to register a business in the UK, choose your structure first. Sole traders register for Self Assessment with HMRC, which is free. Limited companies incorporate with Companies House, which costs £100 online from 1 February 2026, and every director must verify their identity. After that, register for the taxes that apply, open a business bank account and diarise your annual filings.

Whether you are launching a tech startup, consultancy, or retail venture, this updated guide walks you through exactly how to register a business in the UK step by step—from choosing your structure to final HMRC compliance. Following these steps correctly protects your personal assets, ensures tax efficiency, and prevents costly penalties under the Economic Crime and Corporate Transparency Act.

Step 1: Choose sole trader, limited company or partnership

Before you learn how to register a business in the UK step by step, you must select the right legal structure. Your choice affects tax, liability, and administrative burden.

Sole Trader

• Making Tax Digital for Income Tax: from April 2026, if your qualifying income is over £50,000, you must use MTD-compatible software for quarterly updates
• Register with HMRC for Self Assessment by 5th October in your second tax year
• Simplest structure but unlimited personal liability remains

Limited Company (Ltd)

• Corporation Tax: Main rate 25% (profits >£250k), small profits rate 19% (profits ≤£50k), marginal relief between £50k-£250k
• New requirement: All directors must complete identity verification (see Step 3)
• Benefits: Limited liability protection; more tax efficient for profits >£50k

Partnership/LLP

• LLPs now require identity verification for all members under 2026 rules

2026 Recommendation: The £50,000 qualifying-income MTD threshold makes limited companies more attractive for businesses expecting rapid growth, as Corporation Tax compliance avoids the new quarterly MTD reporting required for sole traders above the threshold.

Learn more in the GOV.UK guide Set up a business.

Step 2: Check your business name is available

How to register a business in the UK step by step requires a compliant name. Companies House now rejects names suggesting false government connections or containing hidden computer characters.

• Suggest false connections with UK government/foreign governments
• Contain computer code or hidden characters (crackdown on cyber fraud)
• Are too similar to existing names

For Limited Companies:

• Use the updated Companies House name availability checker
• Must end in “Limited” or “Ltd”
• New: You must confirm the company’s intended activities are “lawful” (declared on incorporation)

For Sole Traders:

• Check the UK Intellectual Property Office database

Step 3: Verify your identity with Companies House

A critical new step in how to register a business in the UK step by step is director identity verification. Under the Economic Crime and Corporate Transparency Act, this is now mandatory.

How to Verify:

1. Direct verification: Use the Companies House mobile app (iOS/Android) with photo ID (passport/driving licence) and selfie biometric check
2. Via an Authorised Corporate Service Provider (ACSP): a registered formation agent or accountant can verify ID on your behalf

Timing:

• Directors must verify their identity before or when they’re appointed. Existing directors verify when they next file their confirmation statement.

For Sole Traders:

• No Companies House identity verification is required to register as a sole trader with HMRC.

Step 4: Register with Companies House or HMRC

Limited Company Registration 2026

New Required Information:

1. Registered Email Address: Must be provided to Companies House (not publicly displayed, but used for official communications)
2. Lawful Purpose Statement: Confirmation that company will be formed for lawful purposes
3. Identity Verification: As detailed in Step 3
4. Share Capital: If issuing shares, statement of capital must be more detailed (new categorization requirements)

Registration Methods:

Option A: Companies House Direct (Online)

• Cost: £100 online (from 1 February 2026; it was £50 from May 2024)
• Requires: All directors to have completed ID verification first

Option B: Authorised Corporate Service Provider (ACSP)

• Cost: £75-£200 (includes ID verification service)
• Recommended for 2026: ACSPs can verify identities and submit simultaneously, avoiding delays
• Additional benefits: Registered office address service (privacy protection from new public register of addresses)

Option C: Third-Party Software

• Many accounting packages (Xero, Sage) now offer direct incorporation with built-in ID verification

Sole Trader Registration 2026

Digital-First Process:

• Register via HMRC online services (paper forms phased out for most applications)
• UTR still sent by post for security, but temporary reference provided digitally immediately

Step 5: Register for Corporation Tax, VAT and MTD

Making Tax Digital for ITSA (2026):

Making Tax Digital for Income Tax Self Assessment (MTD for ITSA):

• From 6 April 2026: sole traders and landlords with qualifying income over £50,000
• From April 2027: over £30,000. From April 2028: over £20,000
• Requires quarterly digital updates plus end-of-period statements

What This Means for New Registrations:

• If you expect qualifying income over £50,000, use MTD-compatible software from the start (Xero, QuickBooks, FreeAgent)
• Limited companies are not affected by MTD for Income Tax

VAT Registration:

• The VAT registration threshold is £90,000 of taxable turnover (since 1 April 2024).

Corporation Tax:

• Register via HMRC within 3 months of trading (automatically triggered by Companies House notification)
• Small companies (profits ≤£50k): 19% rate
• Marginal relief applies between £50k-£250k
• Main rate: 25% (profits >£250k)

Step 6: Open a Business Bank Account

Following how to register a business in the UK step by step includes separating finances. Under Economic Crime Act rules, banks now require enhanced due diligence (3-5 day verification periods).

2026 Banking Landscape:

• Enhanced Due Diligence: Expect 3-5 day verification periods due to Economic Crime Act requirements (all banks must verify beneficial owners)

Accountancy Software (Now Essential):

• MTD compliance: MTD-compatible software (such as FreeAgent, Xero or Sage) is required for sole traders with qualifying income over £50,000
• Companies House Integration: Most software now submits confirmation statements and accounts directly via API

Step 7: Maintain Post-Registration Compliance

Completing how to register a business in the UK step by step is just the beginning. Ongoing 2026 obligations include:

Within 14 Days:

• Identity Verification: If not done during registration, directors face company strike-off risk
• Shareholder Register: Updated requirements for recording “nature of control” (more detailed than pre-2024)

Within 3 Months:

• Lawful Purpose Confirmation: First confirmation statement must reaffirm lawful trading intent

Ongoing 2026 Requirements:

Confirmation Statement:

• Filed annually: £50 a year online (from 1 February 2026)
• New: Must include registered email address and verification that intended future activities remain lawful

Annual Accounts:

• Filing deadline remains 9 months after accounting period end
• New: Enhanced tagging requirements for iXBRL format (software handles this automatically)

Persons with Significant Control (PSC):

• All PSCs must be verified individuals (no corporate PSCs allowed without verified human representatives)

Common registration mistakes to avoid

1. Virtual Office Misuse: New rules require registered offices to be “appropriate” (must receive documents, not just PO boxes)
2. MTD non-compliance: sole traders with qualifying income over £50,000 who don’t use compatible software risk penalty points and penalties

How much does it cost to register a business in the UK?

Next steps after registering your business

Understanding how to register a business in the UK step by step in 2026 means navigating identity verification, updated fees, and MTD requirements. While the process involves more security checks than previous years, these measures protect legitimate businesses from fraud.

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Frequently asked questions