24AUG

Record 5.66m firms as inflow is filtered

1 min read

16:40UTC

Britain's active business population hit a record 5.66m this month, while new registrations fell 5.7%, a fall NatWest attributes in part to identity-verification reforms.

← Back to UKRI's sponsor department no longer exists Jump to analysis ↓

TechnologyDeveloping

Key takeaway

A record 5.66m active businesses sits alongside an inflow filtered by identity-verification reform.

Britain's active business population reached a record 5.66m this month, according to the New Startup Index published by NatWest with the data company Beauhurst ¹. Over the same series, 402,000 new companies registered with Companies House in the first half of 2026, down 5.7% year on year. NatWest attributes part of that fall to regulatory reforms cutting out low-intent and fraudulent registrations, the kind Companies House gained identity-verification powers to strip out.

Those two numbers only make sense together. The stock of trading businesses is at a record while the inflow is being filtered at the door, which is what a registry clean-up looks like in the data. Four hundred thousand registrations that are all real feed a better funding pipeline than half a million that are not, so the fall reads as a cleaner series rather than as a cooling one. Anyone quoting the 5.7% on its own, in either direction, is quoting half a measurement.

Application software led every category with 28,100 incorporations. Scotland posted the strongest regional growth at 3.73% against the second half of 2025, ahead of the East Midlands at 3.3%, and London still took more than 136,000 new companies. Regional growth rates off small bases move easily; London's absolute share does not. HM Revenue and Customs recorded the funding side of that pipeline thinning last year, with the number of individuals claiming Enterprise Investment Scheme relief down 7% to 33,220 .

Deep Analysis

In plain English

Two different numbers moved in opposite directions this month, and they are easy to misread against each other. Britain's total number of active businesses hit a record 5.66m. But the number of brand new companies registering with Companies House in the first half of 2026, 402,000, was down 5.7% compared with the same period last year. NatWest and Beauhurst, who publish this data together, say part of that fall is because Companies House now has new powers to check people's identities when they register a company, which is filtering out fake and low-intent registrations that used to inflate the count. So the fall in new registrations does not necessarily mean fewer real businesses are starting; it may mean the number was cleaner. Application software led every business category with 28,100 new companies, Scotland grew fastest of any region, and London still added more than 136,000 new companies.

Deep Analysis

Root Causes

Companies House gained identity-verification powers this year specifically to filter out low-intent and fraudulent registrations, exactly the category NatWest and Beauhurst say accounts for part of the 5.7% fall in new registrations; a company that never traded or was registered fraudulently inflates the count of 'new companies' without adding to Britain's genuine business base.

That is why the active business population can hit a record 5.66m in the same reporting period that new registrations fall: the stock keeps growing even as the inflow is filtered for quality rather than shrinking for lack of demand.

What could happen next?

Meaning
NatWest and Beauhurst attribute part of the 5.7% registration fall to identity-verification reforms filtering fraudulent sign-ups, not to fewer genuine businesses starting.

Sources:UKTN

Mentions:NatWest →Beauhurst →Scotland →London →Enterprise Investment Scheme →

First Reported In

Update #14 · UKRI's sponsor department no longer exists

UKTN· 24 Aug 2026

Read original →

Different Perspectives

Highland Europe

Highland Europe, the growth-equity firm behind a €1bn-plus fund, took €65m from the British Business Bank into its Technology Growth Fund VI on 30 July via British Patient Capital. For a Geneva-based growth investor, the Bank's cheque is routine cornerstone capital, unrelated to which Whitehall department currently claims to sponsor UKRI.

Integrity Growth Partners

The Los Angeles firm put £16.1m into Prevalent AI on 24 August, the London GCHQ-alumni company's first outside capital, specifically to fund its US expansion. Its stake is a single commercial bet on one UK deep-tech founder's American growth, not a comment on which department UKRI answers to this month.

Temasek

Temasek led PhysicsX's Series C on 30 July, into which the British Business Bank put $25m through British Growth Partnership Fund I. State-backed pension capital rides behind a foreign-led growth round while UK weekly tech funding fell 72% to £102.95m across nine rounds three weeks later.

Innovate UK's Women in Innovation cohort

Sixty-one founders won £75,000 grants from Innovate UK on 5 August, the programme's largest-ever cohort, with a further 39 highly commended founders taking support without cash. For these founders the sponsorship dispute over UKRI's parent department is academic: the money and mentoring arrived exactly as scheduled.

Financial Conduct Authority

The FCA added five fintechs, ClearScore, Modulr, Teya, Urban Jungle and Zilch, to its Scale-up Unit on 7 August, the first cohort it regulates solely rather than jointly with the Prudential Regulation Authority. The unit's expansion is a routine regulatory build-out running on its own timetable, unconnected to the sponsorship dispute over its sister department UKRI.

Cabinet Office

The Cabinet Office ran the DSIT-to-BIST transfer as a standard cross-government machinery change, the kind gov.uk pages and framework documents routinely take months to catch up with after any department is abolished or renamed. Officials treat the paperwork lag as administrative sequencing, not dysfunction: funding and grant-approval layers moved first because they had to keep working.