Introduction
In the United Kingdom, there is no official business type called “One Person Company” (OPC) like in India. However, UK law allows an individual to operate a limited company as the sole shareholder and sole director — this serves as the UK equivalent of an OPC.
The UK is one of the most business-friendly countries in the world, allowing anyone (including non-residents) to form a company with just one person. This structure provides the limited liability, legal identity, and professional status that entrepreneurs and freelancers need.
1. What Is a One Person Company in the UK?
In the UK, a One Person Company is simply a Private Limited Company (Ltd) run by one person who is both the director and the sole shareholder.
The individual:
- Controls the company
- Owns 100% of the shares
- Manages daily operations
This is fully legal and very common in the UK, especially among:
- Freelancers
- Consultants
- Online business owners
- Startups
2. Key Features of a UK One Person Company
| Feature | Description |
|---|---|
| Type | Private Limited Company (Ltd) |
| Owner | One person (director and shareholder) |
| Legal Status | Separate legal entity |
| Liability | Limited to the amount invested |
| Registration | Through Companies House |
| Tax | Corporation tax on profits |
| Compliance | Annual filings and accounts |
3. Advantages of Registering a One Person Company
3.1 Limited Liability
Your personal assets are protected. If the business faces financial issues or legal problems, your liability is limited to your investment in the company.
3.2 Legal Identity
Your company is a separate legal entity. It can own property, open bank accounts, and enter into contracts in its own name.
3.3 Professional Image
A limited company looks more professional to clients and investors than a sole trader business.
3.4 Tax Efficiency
You can pay yourself via a mix of salary and dividends, which can be more tax-efficient than income tax as a sole trader.
3.5 Easy to Set Up and Run
Forming a limited company in the UK can be done online in under 24 hours and costs just £12 via Companies House.
4. Disadvantages
4.1 Compliance
You are required to submit annual accounts, confirmation statements, and possibly audit reports, depending on turnover.
4.2 Public Disclosure
Your name, registered address, and company details are publicly visible on the Companies House register.
4.3 Accounting Complexity
You may need an accountant to handle taxes, VAT, payroll, and other financial tasks.
5. How to Register a One Person Company in the UK
Step 1: Choose a Company Name
- Must be unique
- Cannot be offensive or misleading
- Must end with “Limited” or “Ltd”
Use the Companies House name availability checker
Step 2: Decide Company Structure
You will be:
- The sole director
- The only shareholder
You must also appoint: - A registered office address (can be your home)
- A person with significant control (PSC) (you)
Step 3: Prepare Documents
You need:
- Memorandum of Association (automatically created online)
- Articles of Association (standard model can be used)
Step 4: Register with Companies House
You can:
- Register online directly via Companies House (£12 fee)
- Use a formation agent or accountant
Step 5: Get a Company Number and Certificate
After approval, you will receive:
- Certificate of Incorporation
- Company Registration Number (CRN)
6. Taxation of a One Person Company in the UK
| Tax Type | Description |
|---|---|
| Corporation Tax | 19%-25% on profits (depending on size) |
| PAYE/National Insurance | On salaries paid to yourself or employees |
| Dividend Tax | On dividends after corporation tax |
| VAT | Register if turnover > £90,000/year (2025 threshold) |
You’ll also need to:
- File Company Tax Return (CT600) annually with HMRC
- File Annual Accounts and Confirmation Statement with Companies House
7. Running the Business as a One Person Company
As the sole director and shareholder, you are legally required to:
- Maintain accurate accounting records
- Pay taxes on time
- Meet filing deadlines
- Act in the best interest of the company
Even though you are the only person involved, you must keep business and personal finances separate and comply with all legal obligations.
8. One Person Company vs Sole Trader in the UK
| Criteria | Sole Trader | One Person Ltd Company |
|---|---|---|
| Legal Entity | Not separate | Separate legal person |
| Liability | Unlimited | Limited |
| Tax Rate | Income Tax (20%-45%) | Corporation Tax (19%-25%) |
| Image | Less formal | More credible |
| Admin Work | Minimal | Moderate to high |
| Cost to Start | None | ~£12 registration fee |
Sole Trader is easier to manage, but Limited Company offers protection and tax advantages when profits grow.
9. Can Non-UK Residents Form a One Person Company?
Yes! You can form a limited company in the UK even if you live abroad.
Requirements:
- At least one UK address for registered office
- At least one director (you)
- No need to be a UK citizen or resident
Many non-residents use formation agents or virtual address services to meet UK legal requirements.
10. Responsibilities of a One Person Company Director
Even if you’re the only person in your company, you still carry legal responsibilities:
- Keep financial records for at least 6 years
- Submit corporation tax returns
- Prepare and file statutory accounts
- Avoid trading while insolvent
- Act honestly and in the company’s best interests
Failing to meet these obligations can result in fines, penalties, or disqualification.
Conclusion
A One Person Company in the UK (i.e., a private limited company with one director/shareholder) is an excellent choice for freelancers, contractors, online sellers, and solo entrepreneurs who want the legal benefits of a limited company without needing partners or co-founders.
It provides:
- Credibility with clients
- Limited liability protection
- Tax efficiency
- Simple setup
While it involves more paperwork than a sole trader route, the legal and financial benefits often outweigh the extra administration — especially as your business grows.