According to newly released figures by Companies House, in 2021 to 2022 there were 753,168 company incorporations, a decrease of 7.1% compared to the previous year.
However, it is still the second-highest number of company incorporations on record, with the highest number occurring in 2020 to 2021.
Year by year new company incorporations:
|Year||New Incorporations||Y/Y % Change|
This brings the total number of registered companies to 4,894,356 at the end of March 2022, which is an increase of 3.8% compared to the end of March 2021. However, this number includes 395,014 companies that are in the process of dissolution and liquidation.
Company Dissolutions Vs Company Incorporations
While there was a decrease in new companies forming, there was an increase in company dissolutions.
With 581,824 company dissolutions in 2021 to 2022, we have seen a record number of dissolutions. Never was a higher number recorded in a year.
However, this 32.9% increase needs to be seen in the light of the circumstances. Because of the pressures from the pandemic, compulsory and voluntary dissolutions were paused for 8 months during 2020 to 2021.
As a result, many of the dissolutions we have seen in the period 2021 to 2022 might have taken place the year before, if the legislative easements had not been in place. This is also evidenced by the fact that in 2020 to 2021 there was a decrease of 18.5% in company dissolutions compared to the year before.
Of these 581,824 dissolutions, 33.6% took place in England and Wales. 26.1% occurred in Northern Ireland and 21.6% in Scotland.
Despite the record high number of company dissolutions, the number of companies on the register has risen by 3.8%. This is due to the high number of company incorporations, which is the second-highest on record.
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Given the challenges companies have faced in the past two years, with a global pandemic as well as Brexit coming into force, it is encouraging to see that so many new companies have been formed.
The impact of the coronavirus pandemic on the increase of company incorporations cannot be understated, with a record 810,316 new companies being formed in 2020 to 2021 and 753,168 in 2021 to 2022.
Looking at the long-term trend, the number of company formations and dissolutions have increased steadily.
There were 635,368 more incorporations in 2021 to 2022 when compared with the number of incorporations in 1986 to 1987, when the reporting of financial-year data began. There were 497,624 more dissolutions in 2021 to 2022 when compared with 1986 to 1987.Companies Register Activities: 2021 to 2022 by Companies House
Average Age Of Companies
Over 70% of companies on the register of Companies House are under 10 years old. And just one in 10 companies is over 20 years old. The largest group is companies between 1 and 4 years, followed by the group between 5 and 9 years.
In 2021 to 2022, the average age of companies was 8.6 years, up from 8.5 years the year before. However, since 1999 to 2000, the average age of a company declined steadily, which is probably due to the increase in company incorporations and dissolutions.
With more new companies being formed, the number of younger companies on the register will increase, which will bring down the average age overall.
An interesting figure in this new data set from Companies House is the average age of a dissolved or closed company. While in 2015 to 2016 companies closed at an average age of 5.4 years, in 2021 to 2022 this fell to 4.9 years.
This seems to suggest that many new businesses don’t have a long-term strategy, which is important to establish a company that will stand the test of time. It also highlights the need for more education for entrepreneurs to give small business owners the skills they need to thrive.
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Private Limited Company Biggest Category
95.7% of companies on the register fall in the category of private limited company. In 2021 to 2022, there were 4,843,806 private limited companies. Limited partnerships are the second-highest company type with 56,244 companies or 1.1%.
Followed by limited liability partnerships, which make up 1% of all companies, with 52,394 companies in 2021 to 2022.
These three types of companies have been in the top three since 2004 to 2005.
From 2004 to 2005, private limited companies have consistently accounted for over 96% of all corporate body types. During this time, the three corporate body types accounting for the highest proportion of all corporate bodies have remained unchanged. These are private limited companies, limited partnerships and limited liability partnerships (LLPs). These three corporate body types have consistently accounted for over 98% of all corporate body types.Companies Register Activities: 2021 to 2022 by Companies House
However, there have been small changes, with a rise in the number of charitable incorporated organisations and limited partnerships. At the same time, the number of public limited companies has declined since 2008.
While the trend in terms of company incorporations is encouraging, with the myriad of challenges faced by small business owners, only time will tell, if the positive trend will continue.
If you want to know more about the UK business landscape, read our 81 small business statistics.