Every Contract a Startup Needs in the UK (2026)

Last updated: February 2025

Legal Requirements for a Startup

UK startups incorporated as limited companies must comply with the Companies Act 2006 and file articles of association with Companies House. SEIS and EIS tax relief schemes have specific share structure requirements that must be reflected in your legal documents. The Employment Rights Act 1996 requires written employment terms from day one for any hires. If raising investment, the Financial Services and Markets Act 2000 governs how securities can be offered.

Essential Contracts

Founders' Agreement

Defines equity splits, vesting schedules, roles, IP assignment, and what happens if a co-founder leaves — the single most important startup document

IP Assignment Agreement

Ensures all intellectual property created before and during company formation is properly assigned to the company, not individual founders

Employment or Contractor Agreement

Required for any team members — properly distinguishing employees from contractors is critical for IR35 compliance and PAYE obligations

Required under UK GDPR before collecting any user data, even during beta testing or waitlist sign-ups

Recommended Contracts

Adviser Agreement with Option Scheme

Formalises the relationship with advisers, typically granting 0.25-1% equity via an EMI or unapproved option scheme

Term Sheet Template

A non-binding template for early investment discussions, covering valuation, investment amount, and key terms

Non-Disclosure Agreement

Essential when pitching to investors, partners, or potential hires before they join the team

SEIS/EIS Advance Assurance Documentation

Supporting documents for HMRC advance assurance applications to confirm SEIS/EIS eligibility for investors

Common Legal Risks for a Startup

Co-founder disputes over equity without a vesting schedule leading to dead equity on the cap table
IP remaining with founders personally if not properly assigned to the company before investment
Losing SEIS/EIS eligibility due to incorrect share structures or articles of association
Contractor misclassification triggering HMRC IR35 investigations
Investor disputes due to poorly drafted or missing shareholder protections

Industry-Specific Notes

UK startups seeking SEIS/EIS investment must ensure their articles of association only contain ordinary shares initially, and that the company meets the qualifying trade requirements. The British Business Bank's Start Up Loans scheme also has specific documentation requirements. Consider using the Seed Enterprise Investment Scheme to offer investors up to 50% income tax relief.

FAQ

Do startup co-founders need a formal agreement if they are also directors?

Absolutely. Director duties under the Companies Act 2006 are separate from the commercial arrangements between co-founders. A founders' agreement covers equity vesting, IP assignment, roles, non-compete clauses, and exit scenarios that articles of association and director service agreements do not adequately address. Most startup disputes stem from not having this document.

When should a UK startup put legal contracts in place?

Ideally before incorporation or at the very latest immediately after. IP assignment should happen before any code is written or products developed. A founders' agreement should be signed before shares are issued. Privacy policies must be live before collecting any user data. Waiting until you raise investment often means retroactively fixing problems at significant legal cost.

What contracts do UK startups need before raising a seed round?

At minimum: a shareholders' agreement (or adopt the Seed Fast / ASA advance subscription agreement), properly drafted articles of association, IP assignment from all founders and contractors, employment contracts for the team, and SEIS/EIS advance assurance documentation. Investors will conduct due diligence and missing documents can delay or kill a round.

All the contracts a startup needs

AccountsOS generates UK-compliant contracts tailored to your business. From £10/month.

Get Started Free

This is guidance, not legal advice. Consult a solicitor for complex matters.

View all business types