• New UK company registrations fell 5.7% year-on-year to 402,000 in H1 2026 — the second consecutive half-year decline.
• The active UK business population still hit a record 5.66 million, per NatWest and Beauhurst's New Startup Index.
• Mandatory director identity verification under the Economic Crime and Corporate Transparency Act 2023 looks like a bigger drag than the doubled Companies House incorporation fee that took effect in February 2026.
• Application software was the UK's most active startup category with 28,100 new incorporations; Scotland led regional growth at 3.73%.
• London still accounts for the largest share of new company formation, with more than 136,000 new businesses in H1 2026.

UK company registrations fell to 402,000 in the first half of 2026, down 5.7% from H1 2025 and the second consecutive half-year decline, according to NatWest and Beauhurst's New Startup Index, reported by UKTN. The active business population still hit a record 5.66 million: a shrinking inflow of new filings still adds to a base built over years of prior registrations, so the stock keeps growing even as the rate of new company creation cools. The index attributes more of that slowdown to a new identity-verification rule than to a doubled filing fee.

Two rule changes, one bigger than the other

Two regulatory changes landed inside the measurement window. Companies House began requiring mandatory identity verification for directors and persons with significant control under the Economic Crime and Corporate Transparency Act 2023, a rule that took effect in November 2025. Companies House then doubled its incorporation fee in February 2026. NatWest and Beauhurst's index, as reported by Daily Business Group, attributes more of the H1 2026 slowdown to the identity-verification requirement than to the fee increase — a compliance hurdle, not a price hike, doing most of the work.

Software still leads, Scotland grows fastest

The slowdown isn't evenly spread. Application software was the UK's most active startup category in H1 2026, with 28,100 new incorporations, UKTN reported. Regionally, Scotland posted the fastest growth in new incorporations, up 3.73% compared with H2 2025, while London kept its position as the country's dominant hub for company formation, accounting for more than 136,000 new businesses in the same period. Entrepreneurial activity held up across every UK region, per the index, even as the national total pulled back.

The bet: compliance friction, not demand, is the constraint

Darren Pirie, NatWest's head of accelerator and strategic partnerships, said: "The latest data shows UK entrepreneurship remains in good health. While startup formation has moderated, more businesses are operating across the UK than ever before..." Read against the sector and regional numbers, that holds: software incorporations and Scotland's growth rate didn't stall, only the headline registration count did, and it stalled right where a new compliance rule landed. The bet here is that this is friction, not appetite — watch the next index for whether registrations recover once directors clear the identity-verification backlog.