Setting Up a Business in London 2025

If you are looking to launch your business startup in London with confidence, this resource guide will help you dot the i's and cross the t's.

From choosing a legal structure to securing the perfect workspace solution, London Office Space guides you through every step of setting up a business in London. Our expert brokerage services help startups, corporates, and investors find serviced offices or coworking spaces tailored to their needs and in line with 2025's hybrid work and sustainability trends.

Choosing the Right Business Structure for 2025

Your business’s legal structure shapes taxes, liabilities, and growth potential. In 2025, the main types of business startups in London are sole traders, private limited companies, and partnerships. Each structure has its unique setup and compliance requirements, impacting your business trajectory and growth potential.

Sole Trader: Simple and Flexible

As a sole trader, you’re self-employed, managing your business as an individual. You retain all profits after taxes but bear personal liability for losses. This structure suits freelancers and small businesses in London’s vibrant startup ecosystem.

• Setup: Register with HMRC using your name or a business name. No Companies House registration required.
• Taxes: Submit a Self-Assessment tax return annually, paying Income Tax and National Insurance. Register for VAT if turnover exceeds £90,000 (2025 threshold).
• Benefits: Easy setup, full control, and ideal for low-overhead ventures.

Learn More About Setting Up as a Sole Trader

Private Limited Company: Scalable and Professional

A private limited company is a separate legal entity, with finances distinct from personal assets. Directors and shareholders are liable only up to their investment, and profits are subject to Corporation Tax. This structure is ideal for businesses aiming to scale or attract investors in London’s competitive market.

• Setup: Register with Companies House and notify HMRC for Corporation Tax within three months of starting operations. Appoint at least one director and maintain a UK registered office.
• Taxes: Pay Corporation Tax on profits (25% for profits over £250,000 in 2025). File annual accounts and a Company Tax Return.
• Benefits: Limited liability, professional image, and ability to issue shares.

Register a Limited Company | Running a Limited Company

Business Partnership: Collaborative Growth

In a business partnership, you and your partners share responsibility for profits, losses, and debts. Partners can be individuals or entities (e.g., limited companies), making this structure popular for professional services firms in London.

• Setup: Choose a business name and register with HMRC. A nominated partner files a partnership Self-Assessment tax return, while each partner submits a personal Self-Assessment.
• Taxes: Partners pay Income Tax and National Insurance on their profit share. Register for VAT if turnover exceeds £90,000.
• Other Structures:
  • Limited Partnership: General partners manage the business and are personally liable; limited partners are liable only for their investment.
  • Limited Liability Partnership (LLP): Partners have limited liability, protecting personal assets, ideal for professional firms.

Running a Business Partnership

Registering Your Business in 2025

Compliance with 2025 UK regulations is essential for setting up a business in London. Most businesses must register with Companies House and HMRC:

• Companies House: Required for private limited companies, LLPs, and limited partnerships. Choose a unique business name and provide a UK-registered office address.
• HMRC: Register for taxes (Corporation Tax, Income Tax, or VAT). Sole traders and ordinary partnerships skip Companies House but must register with HMRC.
• Making Tax Digital (MTD): In 2025, HMRC’s MTD initiative mandates quarterly digital tax submissions for VAT-registered businesses and sole traders with turnover above £30,000.

Register with Companies House | Register for HMRC Taxes

Planning Your Business Startup

A robust business plan is critical for success in London’s 2025 market. Key components include:

• Business Plan: Define your strategy, budget, and financial projections. Include a digital marketing plan to leverage platforms like LinkedIn and X.
• Funding: Secure loans, grants, or investment via banks, Business Finance Support Finder, or Local Enterprise Partnerships (LEPs).
• Workspace: Your business location can become a financial burden if you opt for something too expensive too soon. Flexible office spaces are advisable, and options are abundant as you'd expect in the UK's Capital City. It's worth considering a workspace that supports hybrid work, such as coworking spaces, serviced offices, or even virtual office services. Check what facilities you need and what each provider has available before you commit to renting office space. Many business centres allow access to meeting rooms, private offices, breakout spaces, or have communal areas to meet clients, without having to rent larger spaces, which you may only require on an ad hoc basis.
  There is a diverse range of flexible office solutions in London. Conventional space can be cheaper on paper, but be wary of long-term contracts that may be inflexible; this can be risky for start-ups.
• Location: Whilst Mayfair certainly is an esteemed location, ask yourself, is this where you need to be short term? There are many prestigious offices throughout the UK's capital, which are attractive for enticing employees, but if you haven't got a steady and guaranteed income stream yet, the cost can be a barrier. Flexible space in Greater London will offer a much more cost-effective solution short term. (You can always have a plan or have your ideal workspace and location wishlist drawn up for when you have hit a growth stage milestone).

Checklist for Setting Up Your Business in 2025

Streamline your launch with this 2025 checklist:

• Register with Companies House (if applicable).
• Register with HMRC for taxes.
• Verify business name availability with Companies House.
• Register your trademark to protect your brand.
• Obtain necessary business licences (e.g., for regulated sectors).
• Secure business insurance (e.g., public liability, professional indemnity).
• Open a business bank account with digital banking features.
• Secure a workspace: Browse London office spaces for hybrid-ready setups.
• Equip your office: Ensure computers, AI technology, high-speed internet, and ergonomic furniture.
• Assess workspace needs: Confirm that lighting, ventilation, and storage meet 2025 sustainability standards.
• If working in sensitive sectors, ensure the workspace suits your specific needs, has appropriate soundproofing, relevant accessibility, and meets not only your business needs, but also your clients.
• Plan staffing: Hire talent or leverage freelancers for flexibility.

Expert Support for Your London Startup

Navigating the complexities of setting up a business in London is easier when you have expert guidance. Business consultants, banks, and brokerages such as London Office Space offer tailored advice. Our specialists connect you with serviced offices, coworking spaces, or leases in prime submarkets, ensuring compliance with 2025 regulations and supporting your growth, whether you require space for short periods or are looking for a longer commitment.

Contact our team or browse our listings to find a workspace that drives your business forward.