The short answer
for a typical one-director UK limited company, the fixed running costs are usually between about £700 and £1,500 a year before tax. That covers an accountant, accounting software, the Companies House confirmation statement, a business bank account and basic insurance. Corporation Tax, payroll taxes and VAT are on top, and they depend on how much profit you make.
Checked 26 October 2026. Rates for 2026/27.Key takeaways
- Accountancy is normally the biggest fixed cost. Fixed monthly packages from £45.83 + VAT keep it predictable.
- Companies House charges a small annual fee for the confirmation statement, currently £50 online.
- Corporation Tax is 19% on profits up to £50,000 and 25% above £250,000, with marginal relief in between.
- Most one-director companies pay no employer National Insurance if they take a salary of £5,000 or less, but there are good reasons to pay more.
- Budget for tax separately from running costs. Tax is a share of profit, not a fixed bill.
The fixed costs of running a limited company
Fixed costs are the bills you pay whether the company has had a quiet month or a record one. For most small companies they fall into six groups.
1. Accountancy fees
A limited company has legal filing duties that a sole trader does not. You must prepare statutory accounts for Companies House, a Corporation Tax return (CT600) for HMRC and a confirmation statement every year. Most directors hand this to an accountant. Prices vary with turnover, transaction volume and whether VAT or payroll is included. Fixed monthly packages are the easiest way to budget. Ours run from £45.83 + VAT for year-end accounts and tax filings, £62.50 + VAT with bookkeeping and VAT, and £75.00 + VAT for the full service with payroll and director tax planning. See the fees page for what each package includes.
2. Companies House confirmation statement
Every company must confirm its details are correct at least once every 12 months. The online filing fee is currently £50. If you use an accountant for company secretarial work, the filing may be included in a package. A late confirmation statement can lead to the company being struck off, so it is worth diarising. Read more in our guide to the confirmation statement.
3. Accounting software
Cloud software such as Xero, QuickBooks or FreeAgent usually costs between £15 and £50 a month depending on the plan. VAT-registered companies must keep digital records under Making Tax Digital for VAT, so software is effectively compulsory once you register. Some accountants include software in their monthly fee.
4. Business bank account
The company needs its own bank account. Many online business banks charge nothing for a basic account, while high street banks often charge a monthly fee plus charges for card payments and transfers. Expect between £0 and £25 a month.
5. Insurance
Which policies you need depends on your work. Professional indemnity and public liability are common for consultants and contractors, and employers’ liability insurance is a legal requirement as soon as you employ anyone. Typical small-company packages run from a few hundred pounds a year.
6. Registered office, domain and other overheads
Your registered office can be your home or your accountant’s address. If you use a virtual address or mail forwarding, it may cost £5 to £20 a month. A domain, email and a basic website add a little more.
The variable costs: tax and payroll
Corporation Tax
For 2026/27 the Corporation Tax small profits rate is 19% on profits up to £50,000. The main rate is 25% on profits above £250,000. Between the two, marginal relief applies, so the effective rate on each extra pound rises gradually to 26.5% before settling at 25% overall. The thresholds are divided between associated companies. You can test your own figures with our Corporation Tax calculator.
Salary, employer National Insurance and the Employment Allowance
If you pay yourself a salary through PAYE, the company pays employer Class 1 National Insurance at 15% on pay above £5,000 a year. The Employment Allowance, worth up to £10,500, can offset this, but a company where the director is the only employee cannot claim it. Many directors still choose a salary around the £12,570 personal allowance because the salary is a deductible expense and builds State Pension entitlement. See how much salary a director should take.
Dividend tax
Dividends come from profit after Corporation Tax. You pay dividend tax personally above the £500 dividend allowance, and the rates for 2026/27 are 10.75% in the basic rate band, 35.75% in the higher rate band and 39.35% for additional rate taxpayers. See the dividend tax calculator.
VAT
You must register for VAT once your taxable turnover passes £90,000 in any rolling 12 months. After that you add VAT to your invoices and file returns, usually quarterly. VAT is not a cost to the business in the same way as other taxes, but registration adds admin and may add software and accountancy fees. Our VAT guide explains the schemes.
A worked example: £60,000 of income, one director
Let us take a consultant whose company invoices £60,000 in a year with £4,000 of allowable running costs, so £56,000 before paying themselves. They pay a salary of £12,570.
- Employer National Insurance: 15% of (£12,570 − £5,000) = £1,135.50.
- Profit before Corporation Tax: £56,000 − £12,570 − £1,135.50 = £42,294.50.
- Corporation Tax at 19%: £8,036.96.
- Profit after tax available for dividends: £34,257.54.
The director can then draw dividends up to that figure, paying personal dividend tax above the £500 allowance. The point is not the exact numbers but the structure: running costs first, then salary, then Corporation Tax, then dividends. Always keep enough cash back to pay the Corporation Tax bill nine months and one day after your year end.
How to keep running costs down without cutting corners
- Choose a fixed fee. Hourly billing makes year-end invoices unpredictable.
- Keep your books up to date. Messy records cost more to fix at the end of the year.
- Claim what you are entitled to. Work out which allowable expenses apply to you and keep every receipt.
- Do not pay penalties. Late accounts bring automatic penalties from £150 to £1,500 for private companies, and the amounts double if you are late two years running.
- Review the set-up once a year. A limited company that no longer saves tax or adds credibility may be better as a sole trader business.
Does it still make sense to run a limited company?
A limited company costs more to administer than being a sole trader, but it can save tax once profits rise, limits your personal liability and projects a more professional image. As a rule of thumb, many people find a company becomes worthwhile when profits are consistently above roughly £30,000 to £50,000. Compare the two routes in our limited company vs sole trader guide.
Costs in Scotland, Wales and Northern Ireland
Corporation Tax, dividend tax and National Insurance are UK-wide. Scottish taxpayers pay Scottish Income Tax rates on salary, and Welsh taxpayers pay Welsh rates, which currently match England. Companies are registered with Companies House for England and Wales, Scotland or Northern Ireland. Our team works with directors across all four nations.
The bottom line
For a typical one-director company, budget roughly £700 to £1,500 a year in fixed costs before tax, with accountancy the biggest line. A fixed-fee accountant keeps that predictable, and setting tax aside every month stops the bill becoming a surprise.
Frequently asked questions
How much does a limited company accountant cost?
Fixed monthly fees typically range from about £45 to £100 a month for a small company, depending on whether bookkeeping, VAT and payroll are included. Our packages start at £45.83 + VAT.
Can I run a limited company for free?
No. Even a dormant company must file accounts and a confirmation statement. A confirmation statement costs £50 online and you need time or an accountant for the accounts.
What is the cheapest way to run a limited company?
Keep your records tidy in software, use a fixed-fee accountant, claim every allowable expense and file on time to avoid penalties.
Do I have to pay myself a salary?
No, but many directors do because it is a tax-deductible expense and can protect State Pension entitlement. The right amount depends on your situation.
When do I pay Corporation Tax?
Nine months and one day after the end of your accounting period. The CT600 return is due 12 months after the period ends.
This article is general information, not personal tax or financial advice. Rules and rates change, so check GOV.UK or speak to an accountant about your circumstances. Rates shown are for 2026/27, last checked November 2026.