UK Business Formation Statistics: Companies by Sector, Region & Size

UK "business formation" can mean different things, depending on the dataset you use. In the latest official snapshots:

• The UK had 5.5 million private sector businesses at the start of 2024, and 99.8% were SMEs (small and medium-sized enterprises). Source: Business Population Estimates (DBT), 2024 statistical release
• ONS recorded 317,000 business births and 280,000 business deaths in 2024 (birth rate 11.1%, death rate 9.8%). Source: ONS Business demography, UK: 2024
• Companies House recorded 801,864 company incorporations in the financial year ending 2025 (down 10.0% year on year), with 726,735 dissolutions (up 9.6%). Source: Companies House register activities, FYE 2025

What counts as "business formation" in the UK?

People often mix up three different measures:

• Company incorporations, a new legal company registered with Companies House (a legal event).
• Business births, a new enterprise appearing on the ONS business register used for demography (a trading and registration signal).
• Business population, the total number of private sector businesses, including many that are not VAT or PAYE registered (an estimate of the full stock of businesses).

For 2026 research and planning, you usually want to combine them. Incorporations tell you about legal entity creation, ONS births tell you about trading churn, and business population tells you the market size by sector, region, and business size.

The three core data sources and what each one is best for

1) Companies House Free Company Data Product

This is best when you need company-level detail (including features like registered office, status, and SIC codes) so you can build your own sector and regional cuts, or track incorporations over time from raw records. Companies House data products overview

2) ONS Business Demography

This is best for formation and closure rates, by region and broad industry group, plus survival and high-growth indicators. It reports births, deaths and rates, and uses ONS business register sources for the demography view.

3) Business Population Estimates

This is best for how many businesses exist by size band (employees), legal status, region, and industry, including an estimate for businesses that are not registered for VAT or PAYE.

Companies by size: what the UK business population looks like

At the start of 2024, the Business Population Estimates show a business base that is heavily skewed to smaller firms:

• 5.5 million private sector businesses in total.
• 5.45 million were small (0 to 49 employees), 37,800 medium (50 to 249), and 8,250 large (250+).
• 74% did not employ anyone aside from the owner(s), and 26% had employees.
• 52% were estimated to trade without being registered for VAT and/or PAYE, and 48% were recorded as registered.

Why this matters for 2026: if you are tracking "formation" via incorporations or VAT/PAYE registrations alone, you are not measuring the whole market. A large share of UK businesses sit outside VAT/PAYE registration thresholds and will show up differently depending on the dataset you choose.

Companies and businesses by region: where formation and churn are highest

Business births and deaths by region (ONS Business Demography)

ONS shows clear regional differences in 2024:

• London had the highest business birth rate at 12.7% (about 76,000 births, rounded to the nearest thousand).
• West Midlands had the highest business death rate at 10.6% (about 24,000 deaths, rounded).

Selected regional birth and death rates in 2024 (rates are percentages):

• London: births 12.7%, deaths 10.3%
• North West: births 11.9%, deaths 10.5%
• West Midlands: births 11.8%, deaths 10.6%
• South West: births 9.6%, deaths 9.1%
• Scotland: births 10.7%, deaths 9.4%
• Northern Ireland: births 9.5%, deaths 7.3%

Business stock by nation (Business Population Estimates)

Business stock is also uneven. At the start of 2024, Business Population Estimates reported:

• England: 4.79 million private sector businesses
• Scotland: 355,000
• Wales: 220,000
• Northern Ireland: 133,000

How to use this in 2026: pair the stock (how many businesses exist) with the flow (birth and death rates). A region can have a large stock but modest formation rates, or a smaller stock with higher churn.

Companies by sector: where new businesses are being created

Sector shares of the business base (Business Population Estimates)

By count of SMEs, Construction was the largest sector in the 2024 business population estimate, with 870,000 SMEs, around 16% of the total SME population.

Business Population Estimates also shows that sector importance changes when you look at employment and turnover. For example, Wholesale and Retail Trade and Repair accounted for 14% of SME employment and 34% of SME turnover at the start of 2024.

Sector birth and death rates (ONS Business Demography)

ONS Business Demography helps you spot sectors with fast formation and higher churn. In 2024:

• Transport and storage (including postal) had the highest birth rate (15.6%) and the highest death rate (16.5%).
• Accommodation and food services had a birth rate of 14.9% and a death rate of 12.9%.
• Business administration and support services had a birth rate of 14.4% and a death rate of 13.5%.

A practical 2026 takeaway: do not treat "high formation" as automatically positive. Some sectors show strong entry and strong exit, so survival and unit economics matter just as much as launch volume.

Company formation vs business formation: why Companies House and ONS can point in different directions

It is normal for these sources to disagree, because they measure different things:

• Companies House tracks legal company events (incorporations and dissolutions).
• ONS Business Demography tracks births and deaths of enterprises on the ONS business register used for demography.
• Business Population Estimates includes unregistered businesses via estimation, which is why its totals are higher than the ONS "active businesses" counts in Business Demography.

For example, ONS reports around 2.86 million active businesses in 2024 for the demography view, while Business Population Estimates reports 5.5 million private sector businesses at the start of 2024. The gap is driven mainly by the inclusion of unregistered businesses in the population estimates.

How to build a 2026 dashboard: sector, region, size, from the three sources

Step 1: Pick the question first

• If you need "new limited companies created", start with Companies House incorporations.
• If you need "new trading businesses entering the VAT/PAYE system", start with ONS births.
• If you need "total addressable market by sector and region", start with Business Population Estimates.

Step 2: Standardise sector and geography

• Use SIC codes for sector grouping when you work with company-level data.
• Be consistent about geography. Companies House geography is often based on registered office, while business activity can be elsewhere.

Step 3: Treat size carefully

• Business Population Estimates uses employee bands and highlights that many businesses have no employees.
• ONS also provides an "employer demography" view, which is useful when you want formations that create jobs, not just legal entities.

Latest Companies House register signals to watch going into 2026

Companies House publishes quarterly and annual register activity releases that can act as an early warning signal for changes in incorporation and dissolution volume. For example, at the end of September 2025 the total UK register size was 5,454,109, and in July to September 2025 there were 215,982 incorporations and 234,373 dissolutions. Source: Incorporated companies in the UK, July to September 2025

For 2026 planning, these releases are useful because they update more frequently than annual demography outputs. They can help you spot turning points, then you can validate the "real economy" picture when ONS and DBT updates land.

Conclusion

• Use Business Population Estimates to size the market by sector, region, and employee size, including unregistered businesses.
• Use ONS Business Demography to understand births, deaths, survival, and churn by sector and region.
• Use Companies House to track incorporations, dissolutions, and build company-level sector and regional cuts from raw records.