Average cost to start a business in the UK

Starting a business in the UK can be expensive. Costs can quickly pile up, from professional services like accountants to hiring business premises and marketing your new enterprise.

But the costs you will face vary widely depending on both the industry you’re getting into and the area you’re setting up in.

It’s not just a matter of getting the start-up cash together though. According to recent data from the Office for National Statistics (ONS), only around 42% of businesses are still running after 5 years, so you must figure out the long-term costs involved with keeping your business afloat. What is the average cost to start a business in the UK today? Let's take a look. And if you need help paying for all of these expenses, have a look at our article on how to fund a new business.

Start-up business costs

When looking to start up a business, there are lots of different costs you need to consider. From professional services such as accountancy to marketing and business insurance. Below, we’ll go through some of the most common costs for new businesses.

How much does it cost to register a business?

First thing first, when starting a new company there’s a fee to incorporate your business to make it a legal entity. Depending on the type of business you’re setting up, this will likely mean registering as a limited company with Companies House.

As of February 2026, the digital incorporation fee for a new limited company is £100 (up significantly from the £12-£50 range seen in previous years).

Many new entrants will use the services of a company formation specialist or ‘agent’ to do this instead. Doing it this way means you don’t have to worry about the paperwork and getting it right. While this can also be relatively cheap, agency fees can easily add an extra £50 to £150 on top of the standard government fee.

Business premises

Your business property will likely be one of your biggest expenses when starting your new company. Unless you plan to work from home, renting an office space, retail unit, or warehouse can set you back thousands in your first year alone.

In fact, historical research by Lloyds Bank indicated that business premises can consume up to 25% of a new business’s first-year budget. This could be slightly higher once you factor in business insurance to help protect your investment.

Like with all property, it depends hugely on where you are based. Office costs in the UK can easily set you back upwards of £60-£80 per sq ft in cities like Cardiff, Edinburgh, or Belfast, and soar to well over £150-£180 per sq ft in central London.

With business property being such a drain on your initial costs, it’s highly worthwhile to consider a remote or hybrid working model if your industry allows for it.

Equipment and stock

Equipment and stock can both be a massive drain on your cash at first, but they’re an essential expenditure. All businesses will need equipment—whether that’s computers, software subscriptions, hardware, tools, or manufacturing equipment.

If you’re a consumer-facing business selling physical goods, then of course you’ll need to consider stock. Naturally, this will depend heavily on what you’re selling so it’s difficult to make a universal estimate, but you should shop around to get the most cost-effective option. Startups can often spend 20% of their initial budget on IT and technology alone. Seeing how you can cut corners safely—such as buying refurbished tech—can yield massive savings.

Marketing

While some less marketing-savvy entrepreneurs may not see the value of investing in good marketing, you want to make sure your new business hits the ground running. Great marketing helps potential customers hear about you and what you’re offering. After all, you won’t get any business if nobody knows you exist.

At its most basic, this should involve a good website and social media presence. Using a website builder, you would need to pay around £100-£200 for a basic website setup and domain. But if you’re an online retailer, you will want to spend more to make sure the user experience is flawless. This may mean hiring an agency or freelance web developer.

Other marketing activities like direct marketing (such as email), performance marketing (such as search engine optimisation), or paid digital marketing (running ads) each come with different price points. If you don’t know much about marketing, consider hiring a freelancer in the early days to help get your brand set up—it will pay off in the long run.

Marketing for new businesses usually hovers around 7-8% of expected revenues, but startups with margins of less than 10% might need to spend a higher proportion of their budget on marketing just to get through the door.

Professional services

When starting a new business, professional services can be key to ensuring you start off right. This could include legal advice, accounting services, or financial consulting.

Surveys show that over 75% of new entrepreneurs seek business advice before launching. But they typically turn to informal sources, such as friends and relatives, or former colleagues. Far fewer seek formal advice from an accountant or bank.

An accountant, for example, can provide immense value early on. From ensuring compliance with changing HMRC regulations to optimising your tax efficiency, they are an essential asset. Accounting for a small business usually costs between £60 to £250+ per month, depending on the complexity of your new business.

Recruitment

Starting a business is hard, time-consuming work. Because of that, you may not have the time or energy to manually trawl through CVs looking for the right candidate. That’s where recruitment agencies can come in useful.

Recruiters can take the hassle away from hiring for the positions you need filling, but their commission fees can be high. Regardless of whether you use recruiters or not, you need to budget for the time spent interviewing and training, as well as a new employee’s salary, taxes, and pension contributions.

How much does business liability insurance cost?

Business insurance is an absolute must for new businesses. Although you might think it’s just another expense, you will want to be protected should things go wrong. Since you won’t have lots of spare cash in your early days, an unexpected lawsuit could spell disaster.

Public and product liability insurance are popular policies for small businesses. They protect you against injury or damage to a third party arising out of your work. For instance, a customer visits your shop and trips over some stock, injuring themselves. Legal cases are expensive, and insurance protects you financially.

For some industries, having certain types of insurance is legally or contractually essential. For example, financial advisers, accountants, architects, and engineers are required to have professional indemnity insurance.

If you have already, or you’re planning to take on employees, then you’re legally required to take out employers' liability insurance. This applies even if you only take on temporary or casual workers. Without it, the Health and Safety Executive (HSE) can issue serious fines of up to £2,500 for every single day you go without proper cover.

The average cost of public liability insurance for businesses in the UK sits around £118 a year, but it can range from £50 up to £500+ depending on the type of business you are and the level of risk involved.

How much does starting a new business cost?

Historically, larger business surveys from the likes of Lloyds Bank and Hewlett-Packard have estimated the average start-up cost to be anywhere from £12,600 to £22,700 in the first year. These figures factor in heavy expenses like physical premises, vehicles, large legal fees, and premium IT setups.

However, in 2026, the landscape is much more flexible. If you are starting a "lean" digital, freelance, or home-based business, you can easily launch for under £1,000 to £5,000.

What’s the biggest factor determining how much you pay as a start-up? Location and business model. Unsurprisingly, setting up a brick-and-mortar business in London will push your costs toward that £30,000+ mark very quickly. Meanwhile, a home-based service business in Wales or the North of England will cost a tiny fraction of that.

Of course, these are estimates and will be very different based on your particular circumstances. Your location, business premises, industry, and the level of business insurance you require will dictate your exact bottom line.

Regardless of which estimate applies to you, it’s important to understand that starting a business requires financial runway. You will likely have to dip into personal savings or secure a loan to cover the initial start-up phase.

With less than half of businesses surviving their first five years—often due to ongoing economic shifts and inflation—you should try to minimise non-essential costs as much as possible to give yourself the best chance of long-term financial success.