According to new data from 1st Formations, the increase in the Companies House registration fee has hit the number of companies formed in the UK.
The UK is undergoing a serious overhaul of its framework for tackling financial crime, following the staggered implementation of the Economic Crime and Corporate Transparency Act 2023 (ECCTA), which first came into law on 26 October 2023.
As part of this process, Companies House, the UK registrar of companies, increased the fee required to incorporate a company from £12 to £50 (a rise of over 300%). The hike impacted other forms of incorporation at Companies House too, most notably, an increase in the registration fee for overseas companies forming a UK branch or site (£20 to £71, a 255% rise) and the fee for an overseas entity forming a company in the UK (increasing from £100 to £234).
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For those who do not know, ‘overseas entity’ refers to a company or organisation registered outside of the UK that is buying, selling, or transferring property or land in the UK, all of whom must register with Companies House, to reveal their beneficial owners or managing officers, as per the ECCTA’s predecessor: Economic Crime (Transparency and Enforcement) Act 2002.
The government has said that the funds generated by the recent hike in the Companies House incorporation fee will help pay (and contribute) to ECCTA, which has given Companies House additional powers relating to ‘investigation, intelligence and enforcement of anti-money laundering and economic crime prevention’.
Since the price hike, which was initiated on 1 May 2024, the UK has seen a decrease in the number of companies formed, based on data from 1st Formations, the largest company formation agent in the UK (and therefore a notable weatherman of wider trends across the UK incorporation economy).
More specifically, over May (31 days since the fee hike), 1st Formations has seen a significant and unprecedented dip in the volume and number of UK incorporations, especially from overseas customers and non-UK residents, compared to the previous month.
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Comments (2)
Excellent article! It was interesting to learn about this drop in company formation after the price hike for my own financial services UK business.
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