How Much Does it Cost to Start a Business in the UK?

Are you planning to start a business in the UK in 2024 or 2025? If so, it is important to understand the costs of setting up your venture before you go too far. The costs of starting a business in the UK depend on a range of factors, including business type, industry, business model, and location. You may need to cover the cost of visa fees, company registration fees, business insurance, rent, intellectual property registration, wages, IT and accounting. In this article, we will set out some of the main business costs that you can expect to pay as an entrepreneur in the UK, some of which you may never have considered.

Company Registration Fees

The first step in setting up a company in the UK is registration with Companies House. To do this, you can register directly with Companies House or through a company formation specialist. The fee you will pay if applying through Companies House will depend on how you apply and whether you want incorporation on the same day, as follows:

	Online	Software	Paper
Incorporation	£50	£50	£71
Same day incorporation		£78

To register a company with Companies House, you will need to complete form IN01 either online, through your accounting software, or by completing a paper application form. 

Company formation specialists such as Uniwide Formations simplify the overall process and offer packages from £59. We also offer a range of additional services, such as an online client portal allowing you to manage your existing companies in the future, bank and accountant introductions, and the use of our prestigious London address registration for your business correspondence.​

Professional Services: Accountants and Solicitors

Fees for professional services such as accountants can vary considerably, but their use is invaluable in helping businesses remain compliant with their tax and other financial obligations. Accountant fees in the UK range from £100 to £500+ VAT, depending on the level of service required. 

When it comes to engaging a lawyer or solicitor to review and draft contracts, provide advice on business structures, and assist with regulatory compliance, you can expect to pay £200 and £1,000+VAT. It is possible to engage professionals such as accountants and legal advisors on a retained monthly fee basis, reducing the need to employ staff in these roles. Taking this approach will also ensure that you have the professional skills available when they are needed.

Workspace and Utilities

In the UK, workspace rental costs can range from about £30 per square foot in cities like Glasgow to up to £145 per square foot in central London. You can reduce these costs by operating remotely or by using shared office space, especially while you are in the early stages of business growth. 

Remember to factor in the costs of owning or leasing business premises, including any monthly utility bills, including electricity, water, insurance, and internet. These can range enormously from £100 to £1000’s depending on the risk profile and the location and scale of the operation.

Marketing and Branding

Marketing and branding can be costly, but there are ways to keep these costs at a minimum. More and more businesses are choosing digital marketing due to its effectiveness. The competition for strong digital marketing skills is high, which can correspondingly increase costs. While the cost of digital marketing and branding can vary wildly, you can expect to pay:

• £300 – £1000 to set up a basic website
• £10,000 + for a fully customised e-commerce site 
• £100 for simple logos and packaging design
• £300+ per month for a digital marketing agency to handle your social media ads and search engine optimisation (SEO).

Technology and Office Equipment

The cost of laptops, mobile phones, software packages, and other business-related technology and equipment can be considerable. You can reduce this by using second-hand equipment, leasing, and shopping around. Remember, especially in the early days, you don’t need the ‘latest and greatest’ equipment. For example, a refurbished laptop that is more than capable of meeting the needs of most businesses costs around £150 – 200. You can then buy newer technology as you start to scale your business over time. 

Business insurance costs

Most businesses need insurance to mitigate against liability and other unforeseen risks. Public liability insurance is important for businesses dealing with the public, including, for example, businesses:

• Visiting clients’ properties to carry out work
• Requiring customers or clients to visit their premises and 
• With open sites or at venues where members of the public could become injured. 

Another key consideration is employers’ liability insurance. This is an unavoidable cost if you have employees and can range from £50 to £500+ per year for small to medium-sized businesses or more for larger companies. Employee liability insurance can pay compensation if an employee is injured or becomes ill at work. UK businesses can be fined £2,500 every day that they are not properly insured. 

Other forms of insurance, such as cyber insurance or professional indemnity insurance, may be necessary, depending on your business activities.​ Remember to ‘shop around’ to find the best prices for business insurance, and make sure that you are comparing similar products in terms of coverage and exemptions. 

Licensing, Permits, and Compliance

Depending on your chosen business sector, you may need licenses and/or permits to operate legally. You may need to pay a licensing fee, for example, if you plan to open a business that serves alcohol or is in the gambling sector. Licensing fees vary by local council and other factors such as the rateable of the premises (as in the case of alcohol licences). Additionally, your business may need to pay fees to ensure regulatory compliance with health and safety, data protection, and environmental law. For example, you may need to pay a data protection fee to the Information Commissioner’s Office. 

Banking and payroll

Many banks do not charge to open business accounts, though some charge ongoing monthly fees ranging from £5 to £15. There may be other fees that you need to pay for banking, such as credit card fees, card transaction fees, and loan interest. 

If you plan to hire staff, you will use some form of payroll software/system to ensure that wages are paid correctly and taxes are collected and paid to HMRC. Your accountant may handle your payroll for a fee, or you can consider using a third-party payroll service for a fixed monthly fee. ​

Inventory, equipment, and supplies

Purchasing initial stock, equipment, and inventory normally represents the largest cost for most businesses. Costs vary by product type, quality, and volume. There are various strategies that you may be able to consider to lower the cost of stock, inventory, and supplies. Many new businesses lease equipment, which can help spread out costs while preserving cash flow. Another effective method is to put in place a stock and inventory management system to reduce the amount of stock held at any one time and ensure that stock in short supply is ordered promptly. ​

By coming to an arrangement with your suppliers to reduce the cost burdens for your business, you can make sure that you do not reach a cash crunch, for example, stocking products on a ‘sale or return’ basis. 

Immigration costs for non-UK entrepreneurs

For foreign entrepreneurs looking to establish a business in the UK, immigration costs are a significant part of the initial outlay. These costs include:

• Visa application fees
• The Immigration Healthcare Surcharge, which provides access to the National Health Service (NHS)
• Legal fees for an immigration Solicitor to prepare the application fee
• Sponsor licence fees – for employers seeking to sponsor overseas workers.

The Innovator Founder Visa is popular for foreign entrepreneurs planning to do business in the UK. The application fee for the Innovator Founder Visa is currently £1,191 if applying from outside the UK and £1,292 for in-country applications. The immigration healthcare surcharge is currently £1,035 (£776 for children) per person per year.

Given the complexity of the Innovator Founder Visa and other business-related visas, many entrepreneurs instruct an immigration solicitor to handle their application. Immigration solicitor fees vary considerably but can range between £1,500 to £5,000 depending on the complexity of the case and the level of service required​.

Summary of UK business set-up fees/costs 

Cost Type	Estimated Range
Accountancy & Legal Fees	£100 – £500+VAT (accountant)
Office Space	£35.50 – £125/sq ft/month
Marketing & Branding	£50 – £500/month
Insurance	£50 – £500/year
Payroll Set-up	£50 – £200 (initial), £20 – £50/month
Inventory & Equipment	£500 – £5,000+

Final words

We hope you have found this guide to business set-up costs in the UK useful. By doing your research early on, looking for competitive deals, using technology, working with trusted business suppliers and partners, and getting advice from professionals, you can keep your costs to a minimum. Doing so can be essential to ensuring that you can maintain a strong level of cash flow, profitability, and liquidity.