What is a private limited company? Some key facts and figures

After the sole tradership, the limited company is the most popular trading structure in the UK. In this guide, we look at the key features of the private limited company – plus some interesting facts.

How many limited companies are there in the UK?

• According to Companies House, there are over 5.35 million companies on the register (March 2024). Of this number, 95% are private limited companies.
• Interestingly, most companies on the official register are not ‘actively trading’. There are around 2.1m actively trading limited companies.
• The number of companies has increased significantly over time—fewer than 1 million companies were registered in the late 1980s.
• Between March 2023 and March 2024, over 890,000 new companies were incorporated, and over the same period, almost 660,000 companies were dissolved.
• The average age of a company is 8.7 years.

What is a private limited company? Key Facts

Companies House

Companies House, the registrar of companies, oversees the incorporation and running of all limited companies in the UK and holds details about every company, both active and dormant.

Limited liability

Unlike the sole trader business structure, a company’s directors’ liability is limited if things go wrong.

Distinct legal entity

A limited company is a distinct legal entity from its shareholders and directors. This is one of the reasons you should set up a separate bank account for your company. If you are a sole trader, you and your business are a single legal entity.

Separate finances

Unlike the sole trader route, the financial affairs of a limited company and those of its directors are completely separate. This means that directors are not responsible for the company’s debts unless they have been negligent.

Company annual accounts

Private limited companies submit annual accounts to both Companies House and HMRC.

Tax on company profits

Limited companies pay Corporation Tax on their annual profits. The rates changed in 2023—the starting rate was 19%, rising to 25% for larger companies.

Personal tax for company directors

Company directors complete an annual self-assessment form to calculate their income tax liabilities for the previous tax year. The form must be submitted (and any tax paid) by 31 January after the end of the previous tax year.

VAT registration

If the company’s turnover is greater than £90,000 over a 12-month period (2024/25 tax year), you must register the company for Value Added Tax

Comfirmation Statement – an annual requirement

All companies must provide Companies House with a Confirmation Statement each year. This is effectively a snapshot of your company affairs at a moment in time.

Director’s responsibilities

Company directors have a number of legal and financial responsibilities and more administration to deal with than self-employed people.

An accountant can help

Most limited company directors appoint an accountant to deal with their tax affairs, HMRC, and Companies House. A good accountant will save you time and money.

How many directors should a company have?

A limited company can be formed with just a sole director. Since the implementation of the Companies Act 2006, the company secretary has been an optional appointment.

Incorporation provides a professional image

In some cases, having a limited company can give your business a ‘professional’ appearance. It may also be a mandatory requirement in some industries or required by virtue of a contract.

Limited vs. PLC

Private limited companies cannot sell their shares on the stock market – although public limited companies (PLCs) can.

Before you start

You can read more about the steps involved in the limited company incorporation process here and a good legal overview of all the main business structures.

• You can set up a company online via Companies House or a formation agent. The process is fairly straightforward and costs as little as £50.
• If you need help with the incorporation process, find out about our long-term company formation partner here.

When choosing a business structure, you should always consult a professional, as each business has different needs.

There is no ‘right’ or ‘wrong’ business structure—it all depends on what you do, your financial situation, the industry you are in, and how large your operation is likely to become.