UK company numbers hit eight-year high at 5.66 million

New data from NatWest and Beauhurst reveals a record number of active UK businesses, with regional growth accelerating outside London and software development emerging as the fastest-growing sector of 2025.

The UK’s startup landscape showed resilience and continued regional growth in 2025, with new data revealing a record 5.66 million active companies, up 0.82% on the previous year, according to the NatWest and Beauhurst New Startup Index 2026.

The Index, which provides a comprehensive analysis of business and venture creation across the UK, showed that despite tough economic conditions, founders adapted to shifting market pressures and maintained momentum through 2025.

While a slight dip in company incorporations was recorded year-on-year, the Index reveals a robust and growing active company base, sectoral dynamism and notable regional shifts, highlighting continued entrepreneurial confidence and signalling the underlying strength and resilience of the UK’s business ecosystem.

Active Companies and Incorporations
The total number of active UK companies reached a new eight-year high of 5.66 million, an increase of 0.82% compared with 2024. Were this growth rate to continue, the Index projects the UK would reach 5.71 million active companies by the start of 2027.

A total of 832,000 new companies were registered in the UK during 2025, a modest decrease of 1.65% from the previous year. Despite this, incorporation levels remained above those recorded in 2021 and 2022, sitting 7.88% above the 2021 figure, signalling stability after recent exceptional growth rather than a sustained downturn.

Early-stage attrition, however, remains a factor. Among companies incorporated in 2025, 2.43%, approximately 20,200 businesses, were dissolved within the same calendar year. Of the 846,000 entities incorporated in 2024, 27.98% have since been dissolved, reflecting the speed at which early-stage businesses are tested in a market shaped by higher interest rates, constrained access to finance and ongoing cost pressures.

Quarterly trends offered an additional point of interest. Contrary to the established seasonal pattern in which volumes peak in Q1, incorporations peaked at 219,000 in Q3 before a sharper-than-usual decline in Q4 to 187,000. This was likely influenced by new mandatory director identity verification requirements introduced during the quarter, which increased friction in the company registration process.

Regulatory Reform
The continued implementation of the Economic Crime and Corporate Transparency Act, particularly the rollout of director identity verification requirements, contributed to a more selective incorporation environment. These reforms, intended to improve transparency and combat fraud, increased scrutiny at the point of registration, likely tempering incorporation volumes while strengthening the overall integrity of the UK’s business ecosystem. The report notes that any resulting decline in certain sectors may in fact indicate a healthier and more robust business environment with fewer fraudulent incorporations.

Regional Picture: North East Leads the Way
The business formation landscape varied considerably across the UK. Five of the UK’s 12 regions and nations recorded year-on-year growth, with the North East, Scotland and the North West recording the strongest increases, up 5.27%, 4.27% and 3.55% respectively. More modest growth was also recorded in the West Midlands (1.01%), East of England (0.91%) and South East (0.68%).

By contrast, Northern Ireland and Wales saw the largest declines, down 35.6% and 18.9% respectively, reflecting a return to pre-2023 levels following earlier surges rather than any fundamental deterioration. London remained the UK’s startup hub with 279,000 new businesses, though its growth rate eased slightly, down 2.36% year-on-year.

At a local level, Camden led all authorities for new company formations with 45,500 incorporations, up 4.13% from 2024. Outside the capital, Birmingham recorded the highest number of incorporations at 18,800 new businesses, overtaking Cardiff to place fifth overall nationally.

In Scotland, Glasgow City and Edinburgh recorded the highest volumes, while the Scottish Borders and Clackmannanshire saw the fastest growth at 20.5% and 20% respectively. The County of Herefordshire recorded the fastest overall growth rate of any local authority in 2025 at 73.1%, followed by Stafford at 58.8%.

Sector Trends: Software Development Leads
Real estate activities remained among the top sectors for new company formations, with both “Other letting and operating of own or leased real estate” and “Buying and selling of own real estate” posting year-on-year growth of 3.46% and 3.89% respectively. Online retail - “Retail sale via mail order houses or via Internet” - remained the single most common SIC code among newly incorporated companies, though growth was essentially flat at -0.03%.

Technology-led activity showed the strongest momentum, with “Business and domestic software development” recording the fastest sectoral growth, up 38.4% to 24,800 new incorporations. The report links this to broader growth in the UK’s AI sector: since 2022, the number of AI companies in regions such as the West Midlands, North West, East Midlands, Wales and Yorkshire and Humber has at least doubled.

Darren Pirie, Head of Accelerator at NatWest, said: “The UK’s entrepreneurial spirit remains strong, with active company numbers rising despite macroeconomic challenges. These figures show business owners are continuing to adapt and innovate. Small businesses drive growth across the UK, and NatWest is proud to support them to start and scale, which is why this year we’re expanding our free Accelerator five-fold to support 50,000 members.”

Emma Jones CBE, Small Business Commissioner, added: “It is good to see from this research that the number of overall active businesses is up, we are playing our part to ensure continued growth by getting money moving faster through the economy and into the hands of small firms. I have witnessed and experienced the challenges that businesses have faced in the past few years and have deep respect for founders who show resilience and continue to hire, export, and innovate. Long may they survive and thrive.”

Read our outlook on UK M&A in 2026

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