Review of 2024 UK company formations

A new record for UK companies

There were 848,192 new companies formed across the UK in 2024. Although somewhat short of the record set in 2023, this still represents an impressive performance and a testament to the resilience of UK entrepreneurs in the wake of a number of headwinds:

• The continued impact of inflation and higher interest rates persisting longer than previously forecast
• Political uncertainty, with policy focus distracted by the pending UK general election and the change in government priorities following the election
• Continued global uncertainty, in Ukraine and the Middle East, alongside the anticipated impact of the presidential election in the USA

For the first time in a number of years, Companies House also uprated their fees in May 2024, reflecting the impact on the Registrar of the provisions of the Economic Crime and Corporate Transparency Act. For company formations, that meant an increase from £12 to a new fee of £50. It was thought that this fourfold increase – especially when allied with increases in other fees, such as the new fee of £34 for the annual confirmation statement – could result in a significant reduction in company formations. Overall, however, the effect has been limited. The rush to benefit from lower fees ahead of the change did mean a record 98,652 companies were formed in April 2024, the highest figure in any single month to date.

Perhaps related in part to the change in filing fees, Companies House’s enhanced powers to challenge information submitted and a higher frequency of accelerated strike off proceedings, there was a record number of 690,501 dissolutions recorded in 2024.

However, the total population of 5,637,210 companies at the end of 2024 is a new record, an increase of 2.9% compared to the end of 2023 and 26.1% up on five years ago.

While the vast majority (96.1%) of UK companies formed were private companies limited by shares, we also saw an increase in certain specialised corporate forms:

• Community interest companies (CICs) – 7,825 formed, up from 6,623 in 2023
• Limited liability partnerships (LLPs) – 4,821 formed, up from 1,086 in 2023

There is also a consistent number of companies limited by guarantee (12,186 in 2024) and charitable incorporated incorporations (3,891 in 2024) formed, demonstrating the solid place these forms continue to maintain in the corporate landscape of the UK. While much commentary about the economy relates to public limited companies, there were only 177 new plcs formed in 2024.

Regional variations

There were marked regional variations under the surface of the overall national picture.

England saw 719,157 new companies formed in the year. When adjusted for population, that equates to 12.6 new incorporations per 1,000 people, still ahead of most areas of the UK.

Within England, London still led activity, even with figures adjusted for population. Of the 719,157 companies formed in England, 280,423 started in one of the London boroughs. That does also reflect the continuing popularity of those agents offering a London registered office address service, even for companies that are physically based elsewhere in England and Wales.

Elsewhere in England, there were 41,700 new companies formed in the West Midlands, 40,892 in Greater Manchester, 23,972 in West Yorkshire and 19,024 in Essex. Three English counties – Herefordshire, Northumberland and Suffolk – saw a record number of new businesses – and only Bristol witnessed its overall business population decrease over a 12 month period.

Wales witnessed a 16.2% increase in companies compared to the end of 2023. Figures for the corporate population in Wales are, however, often skewed by the Registrar temporarily changing the registered office of companies based elsewhere in the UK to one of its addresses in Cardiff, where Companies House is based.

One of the biggest success stories was again in Northern Ireland. Growth of 11.5% in company numbers was spurred by a record 17,408 new incorporations, coupled with lower than half that number dissolved in the year. That’s the best ratio of formations to dissolutions anywhere in the UK, and meant the number of companies based in Northern Ireland surged to a new total of 95,056.

Scotland was home to 38,273 new companies, bringing the total number of companies to an all-time high of 299,235. However, it also saw a record number of dissolutions with 30,189, limiting the growth figure to 2.9% over 2023. The drag of high dissolutions perpetuates a trend of slower growth in Scotland than other areas, with the five-year growth of 17.1% in the number of Scottish companies significantly lower than the other nations of the UK.

What’s the outlook for 2025?

The resilience of the 2024 company formation figures bodes positively for 2025, with a more settled UK political environment and more benign expectations for both inflation and interest rates. However, there remain significant challenges for entrepreneurs to navigate:

• The global outlook remains volatile, in Ukraine and the Middle East, as well as in terms of US policy. In particular, the continuing threat of tariffs will alarm many UK companies, and if the US itself tracks towards recession it’s likely based on previous experience that the UK economy will see an impact.
• In the UK, the announced increase to National Insurance Contributions from April 2025 is causing many companies to defer investment decisions, contributing to what the British Chambers of Commerce have labelled a ‘powder keg of costs’. It will similarly encourage many entrepreneurs to think twice before starting a new enterprise, particularly one that requires good staffing for success.
• Similarly, proposed changes to employment rights legislation will concern many employers, or those businesses considering employing staff for the first time.
• Companies House continue the implementation of the Economic Crime and Corporate Transparency Act. The next step will require identity verification of all directors and people with significant control, both when new companies are formed and for all existing companies. For firms of accountants, most of which will also need to look to register anew as authorised corporate service providers, this will pose both a business opportunity and a new operational challenge.

Especially in this context of evolving requirements from Companies House, first-time directors must be keenly aware of their legal responsibilities in their first year of business. The major challenges are often in delivering the company’s first annual accounts and confirmation statement, and failure to prepare for these is a major cause of the demise of many companies. Choosing a good accountant will help a new business prepare for these and other compliance requirements, as well as provide a valuable source of strategic business advice.