Starting a business in Scotland: structure, registration and the local detail

The three usual options exist in Scotland as everywhere else, and for a sole trader nothing is different at all: you register with HMRC for Self Assessment and your profit is taxed at Scottish rates, which above roughly £33,500 is the main financial consequence of being north of the border.

Partnerships are where Scots law genuinely departs from the rest of the UK. Under section 4(2) of the Partnership Act 1890, in Scotland a firm is a legal person distinct from the partners of whom it is composed. In England and Wales it is not — an ordinary English partnership has no separate legal personality and is simply the partners acting together.

For most owner-managed businesses the real decision is sole trader against limited company, and in Scotland that decision leans on the income tax position more heavily than it does elsewhere, because a sole trader's profit meets the Scottish bands while a company's dividends do not. Our Scottish income tax guide works that through with figures.

Companies House is a single UK-wide registry with a Scottish office in Edinburgh. A company registered in Scotland gets a company number beginning SC, the way a Northern Irish one begins NI. It is the same register, the same forms and the same fees.

Current Companies House fees, which are identical whichever part of the UK you register in:

There is no Scottish premium and no extra Scottish filing. A company registered in England and Wales is perfectly entitled to trade throughout Scotland, so an SC number is a choice rather than a requirement — one usually made for local credibility, or because the business is unmistakably Scottish and would look odd otherwise.

A company registered in Scotland must keep its registered office in Scotland, permanently. It cannot use an address in England, and it cannot move its registration south later — the jurisdiction is fixed at incorporation.

That rules out most of the cheap national registered office services, which advertise a single London address. Several of them say so in their own terms. If you want an SC company you need a Scottish address from day one, whether that is your own premises, your accountant's, or a Scottish office service.

On top of that sits a UK-wide rule that has applied since 4 March 2024. A registered office must be an appropriate address: post sent there has to be capable of coming to the attention of somebody acting for the company, and delivery has to be capable of being acknowledged. PO boxes no longer qualify. A third party's address is still fine provided it meets that test, which a staffed office does and an unattended mail drop does not.

The tax that applies to a new Scottish business is mostly the tax that applies to a new business anywhere:

• Corporation Tax — reserved, identical rates UK-wide.
• VAT — reserved. Registration is required once taxable turnover passes £90,000 in any rolling twelve months, the same figure as in the rest of the UK.
• PAYE and National Insurance — reserved, same thresholds and rates. Scottish employees simply get an S-prefixed tax code.
• Income tax on profit — devolved, and the one genuine difference. Six bands, with the higher rate starting at £43,663.
• Non-domestic rates — devolved, and if you take premises the Small Business Bonus Scheme may take the bill to nothing. See our rates guide.
• LBTT — devolved, and payable if you buy rather than lease. See the LBTT guide.

Making Tax Digital runs on the UK timetable with no Scottish variation, so a Scottish sole trader has exactly the same start date as an English one on the same income.

The public business support landscape in Scotland is different.

• Business Gateway is the first port of call for most new businesses — free local advisers, start-up workshops and early-stage guidance, delivered through local authorities across the country.
• Scottish Enterprise handles growth and export support for companies with scale ambitions in most of the country.
• Highlands and Islands Enterprise covers the north and west with its own remit and its own funding, reflecting a genuinely different economic geography.
• South of Scotland Enterprise does the same job for Dumfries and Galloway and the Scottish Borders.

Which agency you fall under is determined by where you are, and it changes what funding and support you can access. It is worth establishing at the start.

See the full picture in our Scotland overview.