UK business; activity, size and location: 2021

• The number of Value Added Tax (VAT) and/or Pay As You Earn (PAYE) businesses in the UK as of March 2021 was 2.77 million, an increase of 0.6% from March 2020.

• The number of companies and public corporations has continued to rise and represents 74.3% of total UK businesses, while the proportion of sole proprietors and partnerships has fallen to 22.1%.

• The largest industry group is still professional, scientific, and technical, making up 16.4% of all registered businesses in the UK; this is down 0.6 percentage points from March last year.

• London remained the region with the largest number of businesses, representing 19.3% of the UK total; however, the year-on-year growth in London businesses is the lowest since 2018.

The number of VAT and/or PAYE businesses in the UK as of March 2021 increased to 2.77 million, an increase of 0.6% from March 2020. This growth in the business population contrasts sharply with a fall of 5.8% of gross domestic product (GDP) over the same period, decoupling business growth and economic growth after many years in which they tracked each other quite closely. This divergence is likely because of business support schemes preventing business deaths.

Between March 2020 and March 2021, there was an increase of 1.5% in corporate businesses (companies and public corporations). The decrease in sole proprietors and partnerships has continued, down 2.3% compared with a fall of 3.4% last year.

Of the 2.05 million corporate businesses, 46.0% are single-employee limited companies. The largest number of these are in the professional, scientific and technical industry, carrying out management consultancy activities. However, in 2021 the number of these management consultancy businesses decreased by 6.4%.

The professional, scientific, and technical industry accounted for the largest number of businesses, with 16.4% of all registered businesses in the UK. The number of businesses in this industry has decreased for two years running but it remains the largest broad industry group since 2013.

Transport and storage exhibited the highest growth rate for the second year running. Freight transport by road provided the largest contribution to this increase. This is likely at least in part to be because of the increased demand for online shopping and home delivery created by the coronavirus (COVID-19) pandemic.

Despite overall growth in businesses on the Inter-Departmental Business Register (IDBR) in 2021, the number in the information and communication industry fell by 5.7%. This decrease may have been in anticipation of the contractors "off payroll - working rules" changes (IR35) introduced by HM Revenue and Customs (HMRC). The drop of 5.3% in the agriculture industry is primarily because of an improvement in methodology whereby non-commercial holdings have been identified and excluded from the agriculture figures from 2021 onwards.

Between 2019 and 2021, most regions showed an increase in the numbers of registered businesses. East Midlands has shown the largest increase in share, with a rise of 0.2 percentage points. The two regions with the largest decrease were the East and Scotland, both down 0.2 percentage points.

East Midlands experienced the largest growth (2.7%) in the number of businesses between 2020 and 2021, representing around 5,000 businesses. Scotland showed a 1.3% decrease in the number of businesses following a 0.4% increase in 2020.

Please note that, for various reasons, multiple business registrations can be recorded at a single address and this can distort data for smaller geographical areas.

For the first time since 2016 the percentage of businesses that operate from more than one site has dropped, by 0.1 percentage points. Out of the 2.77 million VAT and/or PAYE businesses, only 59,000 operate from more than one site.

Of the businesses with one site, the largest number are within the professional, scientific and technical sector, while in the case of businesses with 20 or more sites the largest number are in the wholesale and retail sectors.

Business

For the purpose of this release the term "business" is used to represent an enterprise.

Company

Companies are businesses that are legally separate entities from the owners. These owners have limited liability, meaning they are not wholly responsible for losses and debts.

Enterprise

An enterprise can be defined as the smallest combination of legal units (generally based on VAT and/or PAYE records) that is an organisational unit producing goods or services, which benefits from a certain degree of autonomy in decision-making, especially for the allocation of its current resources.

Inter-Departmental Business Register

The Inter-Departmental Business Register (IDBR) is a comprehensive list of UK businesses used by government for statistical purposes. The IDBR provides the main sampling frame for surveys of businesses carried out by the Office for National Statistics (ONS) and other government departments. It is also an important data source for analyses of business activities.

The two main sources of input are Value Added Tax (VAT) and Pay As You Earn (PAYE) records from HM Revenue and Customs (HMRC). Additional information comes from Companies House, Dun and Bradstreet and the ONS business surveys.

Local unit

A local unit is an individual site (for example a factory or shop) within an enterprise.

Partnerships

A business run by two or more self-employed people.

Public corporations

A public corporation is a market body which is controlled by central government, local government or other public corporations and which has substantial day-to-day operating independence so that it is seen as an institutional unit separate from its parent departments.

Sole proprietors

A business run by one self-employed person.

The UK business: activity, size and location Quality and Methodology Information document contains important information on:

• the strengths and limitations of the data and how it compares with related data

• quality characteristics

• users and uses of the data

• how the output was created

• accessibility and characteristics

The figures for this release are produced from an extract taken from the Inter- Departmental Business Register (IDBR), recording the position of businesses on 12 March 2021, in line with the same timing of all previous releases of this publication.

This publication represents the businesses registered with HM Revenue and Customs (HMRC) for VAT and/or PAYE. The Department for Business, Energy and Industrial Strategy (BEIS) produces Business Population Estimates. These estimates seek to provide full coverage of all types of businesses in the UK including an estimate of the unregistered business population.

Since IDBR snapshots for this release are taken in March, the appropriate gross domestic product (GDP) growth rate for Figure 2 is the year to Quarter 1 (Jan to Mar). However, the trends are similar with calendar year growth rates for GDP too.

Numerous breaks in the methodology of the IDBR exist over time. It is not possible to calculate a growth rate in the IDBR for 1996 as the IDBR was created in 1995; previously it was the Business Statistics Office Register, which was similar but not exactly comparable.

Please note the figures in the statistical bulletin tables use disclosure methods and are rounded individually. Therefore, the sum of component items may be slightly different to the totals shown.