At 5.66 million, active companies reached an eight-year high in 2025 but there was a 1.65% year-on-year fall in new company incorporations, analysis by NatWest and Beauhurst revealed.
The report said new incorporations were different to the pattern from previous years. After a peak in the third quarter with 219,000, there was a sharper-than-usual decline in the fourth quarter, which it claimed was likely influenced by new director identity verification rules.
In total, 832,000 new companies were registered in the UK during 2025.
The North East, Scotland and the North West recorded the strongest year-on-year growth in incorporations, rising by 5.27%, 4.27% and 3.55% respectively, while Northern Ireland and Wales saw the largest declines, reflecting a return to pre-2023 levels after earlier surges.
London remained the UK’s start-up hub with 279,000 new businesses, and at a local level, Camden led all authorities for new company formations, with strong expansion also seen in Birmingham and Edinburgh.
Real estate activities remained among the top sectors for new company formations, but 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.
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.”
Emma Jones CBE, Small Business Commissioner and SMEWeb columnist, 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.”