Companies House fee hike: Freelancers face £100 Incorporation Charge and £50 annual costs from February 2026
Sole traders and contractors incorporating as limited companies will face significantly higher Companies House fees from 1 February 2026, with incorporation costs doubling to £100 and new annual confirmation statement charges rising to £50.
New Companies House fees hit freelancers hard
From 1 February 2026, freelancers and contractors registering a limited company for the first time will face substantially increased Companies House fees. Digital incorporation—the most common method—will rise to £100, while paper-based applications will cost £124.
For those requiring same-day incorporation, typically contractors starting urgent contracts, the fee will jump to £156 through software filing.
These changes represent a significant increase from current rates, affecting the thousands of sole traders who incorporate annually to benefit from tax efficiency, limited liability protection, and enhanced professional credibility.
Annual costs increase for existing limited company directors
Existing limited company directors and contractors will also face higher ongoing costs. The annual confirmation statement fee—a mandatory filing required by all active companies—will rise to:
- £50 for digital or software submissions
- £110 for paper filings
Every limited company must file a confirmation statement at least once every 12 months, confirming details such as directors, shareholders, and registered office address. This means all contractors operating through limited companies will face this increased annual charge regardless of turnover or profitability.
Why sole traders incorporate: a practical example
Consider a freelance strategist currently operating as a sole trader earning £50,000 annually. She’s considering incorporation for several compelling reasons:
- Limited liability protection: Operating as a limited company separates her personal assets from business liabilities. If her company faces legal action or debt, her personal home and savings remain protected—unlike sole trader status where she has unlimited personal liability.
- Professional credibility: Many larger clients and agencies prefer working with limited companies rather than sole traders, perceiving them as more established and professional. Some contracts explicitly require suppliers to operate as limited companies.
- Pension contributions: Limited companies can make employer pension contributions that are deductible against Corporation Tax, providing tax-efficient retirement planning.
- Tax efficiency: As a sole trader, she pays Income Tax and Class 2 and Class 4 National Insurance on all profits. By incorporating, she can pay herself a small salary (typically around £12,570 to maximise the National Insurance employment allowance) and take remaining profits as dividends, which are taxed more favourably. This could save her approximately £3,000-£5,000 annually in tax and National Insurance.
However, like all self-employed workers, those efficiencies get eaten up fast through insurance, business banking accounts, accountancy and filing costs and covering your own sick pay fund, equipment and bills to run your business.
Additional HMRC costs and filing obligations
Beyond Companies House fees, newly incorporated freelancers face several HMRC-related costs and obligations:
- Among the changes are compulsory identity verification from 18 November 2025 to confirm that people setting up or running a company are who they claim to be.
- Corporation Tax registration: Must be completed within three months of starting to trade. While registration is free, companies must file annual Corporation Tax returns (CT600) by 12 months after the accounting period ends, with tax due nine months and one day after the period ends.
- PAYE registration: If paying yourself a salary (recommended for most contractors), you must register for PAYE. This is free but requires monthly or quarterly payroll submissions.
- VAT registration: Mandatory if turnover exceeds £90,000 (as of 2024/25). Registration is free, but returns must be filed quarterly or monthly.
- Accountancy costs: Most limited company directors require professional accounting services, typically costing £800-£2,000 annually for straightforward contractor arrangements. This covers annual accounts preparation, Corporation Tax returns, and year-end compliance.
- Annual accounts filing: Companies must file annual accounts with Companies House within nine months of their financial year-end. Late filing incurs automatic penalties starting at £150.
Other fee changes affecting contractors
Several other Companies House fees are increasing from 1 February 2026:
- Change of company name (same day): £85
- Registration of a charge: £14 (relevant when securing business loans)
- Voluntary strike off: £13 digital, £18 paper
- Limited Liability Partnership (LLP) fees mirror the increases, with registration rising to £100 digitally and £124 on paper.
What should contractors and freelancers do now?
Freelancers considering incorporation before the fee increases should act before 1 February 2026 to avoid the higher charges. However, incorporation should never be rushed purely for fee savings—the decision should be based on sound tax planning and business structure advice.
Those already operating limited companies should budget for the increased annual confirmation statement costs when planning 2026/27 finances. The £50 annual fee represents a permanent ongoing cost that will apply to all active companies.
Contractors should also ensure they’re filing digitally rather than on paper wherever possible, as paper filing fees are consistently higher across all transaction types.
Industry reaction and government justification
The fee increases come as Companies House undergoes significant modernisation under the Economic Crime and Corporate Transparency Act 2023, which introduces enhanced identity verification, greater powers to query and reject filings, and improved accuracy of company data.
While the government has positioned these increases as necessary to fund improved services and combat economic crime, contractors and small business groups have expressed concern about the disproportionate impact on sole directors operating micro-businesses.
For many freelancers, these increases—combined with recent changes to dividend tax rates, National Insurance, and IR35 regulations—add to a growing burden of compliance costs and administrative complexity.
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