Company House analysis shows business formations fell in 2024
New analysis of Companies House data published today by Zempler Bank, a digital bank serving start-ups and microbusinesses, shows company formations fell year-on-year by eight per cent in 2024.
Zempler, which offers a company formations service, has produced analysis showing that there were 807,000 incorporations in 2024, down from the 844,000 recorded in 2023. This is the first decrease following two successive years of growth in 2021 and 2022, respectively. The December formation number of 55,000 was the lowest in the post-Covid era.
As of May 2024, Companies House introduced increased fees for incorporation and registration, following these changes, Zempler analysis shows a steeper drop off in activity with a decline of almost 20% year on year for the period from May to December. Incorporation fees increased from £12 to £50 as of May.
These changes may also reflect a change in the balance of new business customers at Zempler. The number of sole traders increased from 39% to 42% of new business accounts between 2023 and 2024.
Within the wider data, the gender profile of company directors remains heavily male dominated with only 28% of new company directors female. From an age perspective, over 15% of directors of new incorporations were over 60 and less than 10% under 25. The average age of directors of new companies in 2024 was 40. UK born directors increased from 63% to 65% of total new companies too.
Recent data published by Zempler among 1,000 microbusiness owners across the UK highlighted concerns among entrepreneurs when starting their own business. Lack of access to funding was highlighted as the biggest issue (44%), followed by poor credit ratings concerns (37%). There were also understandable concerns on immediate loss of earnings and benefits from previous employment and personal health issues (both 34%)
The research highlighted that 62% of new businesses rely on personal savings to start their business.
Rich Wagner, Zempler Bank, CEO: “One thing we have learnt from speaking to customers is that many entrepreneurs are not exclusively motivated by money. Millions of small businesses love the freedom of working for themselves and doing something they love. It will be interesting to see whether the changes at Companies House, which may have the effect of weeding out those who aren’t serious about starting a company, result in a higher proportion of businesses surviving, even in challenging economic conditions.”