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

Introduction

How to register a business in the UK step by step has changed significantly in 2026. New identity verification requirements and updated Companies House fees mean founders must follow a precise process to stay compliant from day one.

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 Your Business Structure Before You Register

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

• MTD for ITSA: From April 2026, if your turnover exceeds £50,000, you must use Making Tax Digital software for quarterly reporting
• 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
• Partnership tax reporting also moving to MTD for ITSA from April 2026 (higher turnover thresholds)

2026 Recommendation: The £50k 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 about choosing between sole trader vs limited company

Step 2: Secure Your Business Name for UK Registration

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 (stricter similarity algorithms)

For Limited Companies:

• Use the updated Companies House name availability checker (now with trademark cross-referencing)
• 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—trademark disputes have increased 23% since 2024 reforms

Step 3: Complete Mandatory Identity Verification (2026 Update)

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 Authorised Corporate Service Provider (ACSP): Your formation agent or accountant verifies ID on your behalf (most efficient for multiple directors)

Timing:

• Verification must be completed within 14 days of appointment for new companies
• ACSP route is faster for international founders (no UK address required for ID check)

For Sole Traders:

• No Companies House verification required, but HMRC may request video verification during Self Assessment registration (anti-fraud measure introduced 2025)

Step 4: Submit Your Application to 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: £50 (increased from £12 in 2024/2025)
• Processing: 24-48 hours (slower due to ID verification checks)
• 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)
• New: HMRC issues digital tax account access within 48 hours (previously 10 days for UTR by post)
• UTR still sent by post for security, but temporary reference provided digitally immediately

Step 5: Register for Taxes (MTD & Corporation Tax Rules)

Making Tax Digital for ITSA (2026):

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

• April 2026: Mandatory for sole traders and landlords with turnover >£50,000
• April 2027: Mandatory for those with turnover >£30,000
• Requires quarterly digital updates plus end-of-period statements

What This Means for New Registrations:

• If you expect >£50k turnover in your first year, register for MTD-compatible software immediately (Xero, QuickBooks, FreeAgent)
• Limited companies not affected by MTD for ITSA (follow MTD for Corporation Tax timeline—mandatory from 2026 for some, but most small companies exempt until 2027/2028)

VAT Registration:

• Threshold frozen at £85,000 until at least April 2026
• New: VAT registration now requires identity verification for business owners (matching Companies House standards)

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:

• Digital Banks Dominant: Starling, Monzo, and Tide hold 40%+ market share for new business accounts
• Enhanced Due Diligence: Expect 3-5 day verification periods due to Economic Crime Act requirements (all banks must verify beneficial owners)
• Crypto Considerations: If handling cryptocurrency, banking options remain limited—specialist providers like Xace or Bankera required

Accountancy Software (Now Essential):

• MTD Compliance: FreeAgent, Xero, or Sage Business Cloud required for sole traders >£50k turnover
• 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:

• First Board Meeting: Must be recorded in writing (electronic minutes acceptable)
• Lawful Purpose Confirmation: First confirmation statement must reaffirm lawful trading intent

Ongoing 2026 Requirements:

Confirmation Statement:

• Filed annually (£34 fee as of 2025/2026)
• 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)
• Fee: £40 for paper filing, free for digital (incentive to file online)

Persons with Significant Control (PSC):

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

Red Flags: 2026 Compliance Mistakes to Avoid

1. Unverified Directors: Companies House now actively strikes off companies with unverified directors after 14 days
2. Virtual Office Misuse: New rules require registered offices to be “appropriate” (must receive documents, not just PO boxes)
3. MTD Non-Compliance: Sole traders hitting £50k without compatible software face £200+ penalties from first quarter
4. Lawful Purpose Errors: Vague “any lawful purpose” statements no longer accepted—specific SIC codes required
5. Identity Fraud: Using third-party ID documents now triggers criminal liability under Economic Crime Act (previously civil only)

Cost Breakdown: How to Register a Business in the UK Step by Step (2026)

Conclusion: Start Your Registration Today

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.

Ready to register? MS Limited is a registered ACSP (Authorised Corporate Service Provider) with Companies House. We handle identity verification, provide compliant registered office addresses, and ensure your application meets all Economic Crime Act requirements.