Company Limited by Guarantee in United Kingdom
LBG · Formation from $125
Last verified: June 13, 2026
Corporate Tax
25.0%
State Tax
0.0%
Formation Cost
$125
Annual Fee
$63
Comparison Scores
Privacy, remote setup, banking, and tax efficiency
Calculate full formation cost
Break down one-time filing fees and recurring costs for any supported entity type.
Who Should Choose This?
Profiles that typically benefit from this entity
- Charities and non-governmental organizations (NGOs) seeking official recognition.
- Sports clubs, social clubs, and membership organizations.
- Social enterprises and community-focused projects.
- Property management companies (e.g., residents' associations managing a block of flats).
Who Should Avoid This?
Scenarios where another structure may be better
- Startups and entrepreneurs looking to raise equity investment from venture capital or angel investors.
- Businesses intending to distribute profits to owners as dividends.
- E-commerce or traditional trading companies focused on maximizing shareholder value.
Advantages
- +Protects members' personal assets with limited liability, usually guaranteed to just £1.
- +Enhances credibility and trust, making it the ideal structure for non-profits, charities, and clubs.
- +No shareholders or share capital, clearly demonstrating that the entity is not for personal profit.
- +Eligible to apply for official charitable status with the Charity Commission, unlocking tax exemptions.
- +Profits are reinvested into the organization's mission, perfectly aligning with social enterprise goals.
- +Functions as a separate legal entity, allowing it to own property, enter contracts, and employ staff in its own name.
Disadvantages
- -Cannot issue shares, making it legally impossible to raise equity capital from investors.
- -Profits cannot be distributed to members as dividends.
- -Subject to the same strict compliance, accounting, and filing requirements as a standard commercial limited company.
- -Details of directors, guarantors, and PSCs are publicly available on the Companies House register.
- -Converting to a company limited by shares later is highly complex and usually requires forming an entirely new entity.
Formation Steps
Choose a unique company name (must end in 'Limited' or 'Ltd', unless an exemption is granted for non-profits).
Define the company's objects (purpose) in the Articles of Association, which is crucial if seeking charitable status.
Appoint at least one director (must be 16+ years old) to manage the company's day-to-day operations.
Appoint at least one member (guarantor) and set the guaranteed amount (typically £1).
Identify People with Significant Control (PSCs) who hold more than 25% of voting rights in the organization.
Prepare the Memorandum and Articles of Association tailored specifically for a non-profit or guarantee company.
Register a physical UK office address to serve as the official registered office for government correspondence.
Submit the application to Companies House and pay the £50 online incorporation fee.
Register for Corporation Tax with HMRC within 3 months of starting any business activities.
Cost Breakdown
Detailed breakdown of formation and ongoing costs
| Item | Type | Amount |
|---|---|---|
| Companies House filing fee | One-time | $63 |
| Registered office address & agent | Annual | $50 |
| Bespoke Articles of Association (optional) | One-time | $150 |
| Annual Confirmation Statement fee | Annual | $43 |
| First year total | $263 | |
| Annual ongoing | $93 | |
Real-World Examples
Typical use cases for this entity type
- Oxfam (Registered as a company limited by guarantee and a charity).
- Network Rail (Operates as a not-for-dividend company limited by guarantee).
- England and Wales Cricket Board (ECB) (Governing body structured as an LBG).
Common Mistakes
Pitfalls to avoid during setup and operations
- Using standard model articles instead of bespoke articles when intending to register as a charity later.
- Assuming an LBG is automatically exempt from Corporation Tax without formally applying for charitable status.
- Failing to file the annual confirmation statement and accounts with Companies House on time.
- Trying to issue shares to raise capital, which is legally impossible for a guarantee company.
- Using a personal residential address as the registered office, not realizing it will be permanently on the public record.
Other entity types
Other formation options in United Kingdom
Private Limited Company (LTD)
- Tax
- 25.0%
- Formation
- $134
Limited Liability Partnership (LLP)
- Tax
- 0.0%
- Formation
- $134
Scottish Limited Partnership
- Tax
- 0.0%
- Formation
- $127
Public Limited Company (PLC)
- Tax
- 25.0%
- Formation
- $134
UK Establishment (Branch)
- Tax
- 25.0%
- Formation
- $157
Unlimited Company
- Tax
- 25.0%
- Formation
- $127
Community Interest Company
- Tax
- 25.0%
- Formation
- $146
Compare with Other Countries
| Country / Type | Tax | Formation | Annual |
|---|---|---|---|
| 🇬🇧 Company Limited by Guarantee(LBG) | 25.0% | $125 | $63 |
FAQ
What is a Company Limited by Guarantee (LBG)?
A type of UK company used primarily for non-profits, charities, and clubs. It has guarantors instead of shareholders, and profits are reinvested rather than distributed.
Can an LBG distribute profits to its members?
No, an LBG is typically set up as a non-profit. Any surplus income must be reinvested into the organization's objectives and cannot be paid out as dividends.
How much are members liable for?
Members are only liable for the amount they agree to guarantee in the event the company is wound up. This is typically set at just £1.
Can an LBG be converted into a Company Limited by Shares?
No, you cannot directly convert an LBG to a company limited by shares. You would need to incorporate a new company and transfer the assets over.
Does an LBG pay Corporation Tax?
Yes, an LBG is subject to standard UK Corporation Tax unless it successfully registers as a charity and its income qualifies for charitable tax exemptions.
Can an LBG pay its directors a salary?
Yes, directors can be paid a salary for their work, provided it is permitted by the Articles of Association and is reasonable for the services rendered.
Do I need a registered office in the UK?
Yes, every UK company must have a physical registered office address in the same UK jurisdiction where it is registered (e.g., England and Wales, Scotland, or Northern Ireland).
How long does it take to register an LBG?
Online registration with Companies House typically takes 24 to 48 hours, provided all submitted information is correct and standard articles are used.
Detailed Tax Rates
Corporate Income Tax
| From | To | Rate |
|---|---|---|
| $0 | $50,000 | 19.0% |
| $50,001 | $250,000 | 26.5% |
| $250,001 | No limit | 25.0% |
A Company Limited by Guarantee (LBG) is subject to standard UK Corporation Tax unless it has charitable status and its income is exempt. The main rate is 25%, with a small profits rate of 19% for profits under £50,000.
Personal Income Tax (Top rate: 45.0%)
| From | To | Rate |
|---|---|---|
| $0 | $12,570 | 0.0% |
| $12,571 | $50,270 | 20.0% |
| $50,271 | $125,140 | 40.0% |
| $125,141 | No limit | 45.0% |
The UK personal allowance is £12,570. Income above £125,140 is taxed at the additional rate of 45%. Scotland has a different set of income tax bands.
Capital Gains Tax
24.0%
Capital gains are taxed at 18% for basic rate taxpayers and 24% for higher rate taxpayers. The annual tax-free allowance is £3,000.
VAT / GST
20.0%
Registration Threshold: GBP90,000
Non-UK businesses supplying digital services to UK consumers must register for VAT immediately, as there is no registration threshold for overseas sellers.
Withholding Tax
The UK generally does not levy withholding tax on dividends. Interest and royalties are subject to a 20% withholding tax, which can often be reduced or eliminated under the UK's extensive network of double tax treaties.
Payroll & Social Security
Employer National Insurance Contributions (NICs) are 15% on earnings above £5,000 per year. Employee NICs are 8% on earnings between £12,570 and £50,270, and 2% above that.
Other Taxes
Stamp Duty
A 0.5% tax is generally payable on the transfer of shares in a UK company.
Business Rates
Charged on most non-domestic properties, like shops, offices, and warehouses. Rates vary by property value and local council.
Incentives & Support
Gift Aid
A UK tax incentive that allows charities to claim an extra 25p for every £1 donated by a UK taxpayer.
Increases the value of eligible donations by 25% at no additional cost to the donor.
Eligibility: The LBG must be officially registered as a charity with the Charity Commission and recognized by HMRC for tax purposes.
Formation Requirements
Minimum Capital
No requirement
A Company Limited by Guarantee (LBG) has no share capital. Instead, members guarantee a nominal amount, usually £1, which they agree to pay if the company is wound up.
Local Director
Not Required
No local resident director is required, but the company must maintain a physical registered office address in the UK.
Registered Office
Required
Virtual office allowed. $50-150/year
Notarization Required
No
Power of Attorney (Remote)
Not Required
Online formation agents can register the company electronically with Companies House without requiring a Power of Attorney.
Timeline
Standard: 1-2 business days days
Expedited: Same day days ($195)
Required Documents
- 1Proof of Identity (Passport or National ID)
- 2Proof of Address (Utility bill or bank statement)
- 3Memorandum of Association
- 4Articles of Association (often bespoke for non-profits)
- 5Statement of Guarantee
Compliance & Reporting
Annual Filings
Confirmation Statement (CS01)
Penalty: No automatic financial penalty, but failure to file is a criminal offense that can lead to the company being struck off and fines up to £5,000.
Annual Accounts
Penalty: Automatic penalties ranging from £150 to £1,500 depending on how late the filing is.
Corporation Tax Return (CT600)
Penalty: £100 penalty for missing the deadline, with further penalties increasing for delays over 3 months.
Audit Requirement
Not Required
Exempt if meeting 2 of 3 criteria for two consecutive years: Turnover ≤ £15m, Assets ≤ £7.5m, Employees ≤ 50 (based on 2026 thresholds).
Accounting Standard
UK GAAP (FRS 102 / FRS 105)
Tax Return Deadline
Filing is due 12 months after the accounting period ends, but the Corporation Tax payment is due 9 months and 1 day after the period ends.
VAT Filing Frequency
Quarterly (standard), with monthly or annual options available depending on the scheme
Data Protection
Must comply with UK GDPR. If the company processes personal data, it must register with the Information Commissioner's Office (ICO) and pay an annual data protection fee.
Banking & Payments
Tide
Remote-friendlyA popular digital business banking platform in the UK, offering quick remote setup for companies with UK resident directors.
Starling Bank
Remote-friendlyAward-winning digital bank with no monthly fees, but generally requires the director to be a UK resident.
Wise
Remote-friendlyExcellent for multi-currency accounts and international transfers. Very friendly to non-resident directors of UK companies.
Barclays
A traditional high-street bank offering comprehensive services, including charity accounts for non-profits, but usually requires an in-person visit.
Payment Gateways
Stripe, PayPal, GoCardless, Square, Paddle
Currency
GBP
Multi-Currency: Supported
Account Opening
Opening a bank account for a UK LBG is straightforward for UK residents but can be challenging for non-resident founders. Traditional high-street banks usually require an in-person branch visit. Digital alternatives like Wise or Payoneer offer remote onboarding for non-residents, while local fintechs like Tide or Starling typically require at least one UK resident director.
Practical Information
Timezone
UTC+0 to UTC+1
Business Language
English
Legal System
Common law
Ease of Doing Business
#8
IP Protection
The UK offers robust intellectual property protection, including trademarks, patents, and copyrights, managed by the Intellectual Property Office (IPO).
Double Tax Treaties
130 countries
Notable treaties: United States, Germany, France, Australia, Turkey, Canada
Visa & Residency Options
Innovator Founder Visa
Designed for entrepreneurs with an innovative, viable, and scalable business idea endorsed by an approved body. It has no minimum investment requirement and offers a path to settlement in 3 years.
Global Business Mobility (GBM) - Expansion Worker Visa
Allows managers or specialist employees to come to the UK to set up a branch of an overseas business that has not yet started trading in the UK.
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Changelog
Data updates and changes on this page
Updated Companies House fees and compliance requirements for 2026.
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