By
August 24, 2026
How Can a New UK Company Prove Its Source of Funds?
A new UK limited company can prove its source of funds by showing where its initial money came from and providing documents that create a clear financial trail.
Because a newly incorporated company may not yet have customer revenue or a long trading history, its initial funds often come from a director, shareholder, investor, business loan or early customer payments.
Banks and payment providers may ask for this information as part of their KYC and Anti-Money Laundering checks. HMRC guidance describes source of funds as establishing the provenance of the particular money being used—not merely identifying the bank account it came from.
Source of funds means how and where the particular money being used by the company was generated.
For example, imagine a director transfers £20,000 into a newly incorporated UK company.
The provider may want to establish:
Director's employment income → Personal savings → Director's bank account → £20,000 transfer → UK company account
Simply showing that £20,000 came from the director's personal bank account may not always be enough. Depending on the risk assessment, the provider may also want evidence explaining how the director obtained that money.
A new company does not need an established trading history to have a legitimate source of funds.
Initial funding can potentially come from:
What matters is that the source can be clearly explained and, where requested, supported by appropriate documentation.
A director may use personal savings to fund a new UK company.
For example:
Employment income → Savings → £15,000 transferred to company
Possible evidence could include:
The amount and type of evidence requested will depend on the financial provider and its risk assessment.
A director can lend money to their company.
For example:
Director → £25,000 loan → New UK company
The company should properly record money that the director pays into or lends to it. GOV.UK specifically states that companies must keep a record of money borrowed from or paid in by a director, typically through the director's loan account.
Supporting documents could include the director's bank statement, transfer confirmation, company bank statement and appropriate loan records.
A shareholder may provide the company's initial funding.
For example:
Shareholder's funds → £50,000 investment → UK company
Evidence might include:
For larger investments, the provider may also ask how the shareholder originally accumulated the money.
A new UK company may obtain funding through borrowing.
Possible evidence includes:
A clear trail could look like:
Lender → Loan agreement → £30,000 payment → Company account
The provider may want to understand both who supplied the loan and why.
Some newly incorporated companies begin trading immediately.
If the company has already received customer payments, these can form part of its source of funds.
Supporting evidence might include:
For example:
Customer contract → £10,000 invoice → Customer payment → Company account
This provides a straightforward commercial explanation for the money.
A director or shareholder may own another established business that provides funding to the new UK company.
In this situation, a bank may want to understand:
Supporting evidence could include:
Simply transferring money between companies does not necessarily establish its underlying source.
Funds used to start the company may come from the sale of an asset.
For example:
Property sold → £100,000 proceeds → Director's bank account → £40,000 invested into company
Possible evidence might include:
The documents should establish a reasonable trail between the asset sale and the company funding.
This is not necessarily a problem.
A newly incorporated company may legitimately have no:
Instead, explain that the business is newly incorporated and identify how its startup capital is being funded.
You may also be asked for information about the company's intended activities, expected turnover, customers, suppliers and anticipated transactions. UK customer-due-diligence guidance allows regulated businesses to obtain information about the intended nature of a relationship, including expected activity and the source and origin of funds.
Sometimes, but not necessarily.
Suppose the director provides a statement showing £100,000 in their personal account.
That establishes that the money exists, but the provider could still ask:
How was the £100,000 generated?
Depending on the circumstances, additional evidence might show that the funds came from:
HMRC's 2026 guidance makes clear that source-of-funds analysis goes beyond identifying the account from which money was remitted.
For a new company, the distinction can become particularly important.
Source of funds: Where did the specific money being invested into the company come from?
Source of wealth: How did the director, shareholder or beneficial owner accumulate their overall wealth?
For example:
10 years of employment → £100,000 savings → £30,000 transferred to company
The employment history may explain the source of wealth, while the £30,000 taken from accumulated savings explains the source of funds.
A useful source-of-funds file could contain:
The exact documents required will depend on how the business is funded.
A UK limited company is legally separate from its owners, and its finances should be clearly distinguished from personal finances. GOV.UK also requires companies to maintain records of money received and spent and supporting financial documents.
If a director transfers personal funds into the company, make sure the transaction is properly recorded—for example, as a director's loan where that is the appropriate treatment.
This creates a clearer accounting and KYC trail.
Additional evidence may be requested if:
Source-of-funds verification is risk-based, and enhanced due diligence can involve additional checks concerning the origin of funds.
Do not create artificial invoices, alter bank statements or describe money as customer revenue when it actually came from a director or shareholder.
Similarly, do not provide only the most recent transfer if the provider has specifically asked how the money was originally generated.
The strongest source-of-funds evidence provides a clear and genuine trail.
For example:
Salary → Personal savings → Director's bank account → Director's loan → Company account
rather than simply:
Personal account → Company account
Yes. A newly incorporated company may be funded by directors, shareholders, investors, loans or other legitimate sources. The company should clearly explain and document how it is being funded.
Yes. A director or shareholder can potentially provide personal funds to the company. The transaction should be properly recorded, and the provider may request evidence showing how the savings were generated.
It can form part of the evidence. However, a provider may require additional documents establishing the underlying origin of the money.
Not necessarily. If there are no customers yet, explain how the company's startup capital is being funded instead.
Yes. Companies must keep records of money directors pay into or borrow from the company, normally through the director's loan account.
The provider may need to establish the underlying provenance of the money rather than merely confirming that it is currently held in your bank account.
A new UK company can prove its source of funds even if it has no trading history.
The key is to show where its startup money genuinely originated.
For example:
Personal savings → Director's loan → New UK company
Shareholder funds → Investment → New UK company
Lender → Business loan → New UK company
Customer contract → Invoice → Payment → New UK company
Keep clear, original records that connect the underlying source of the money to the funds arriving in the company's account. This can make KYC and source-of-funds verification significantly easier.
