
Want to Be the Next Cake Boss? What It Really Takes to Start a Cake Business in the UK

Learn how to start a cake business in the UK and scale from home baking to a professional setup with the right tools, setup, and strategy.


Running a cake business from home might get you started, but if you're dreaming bigger, it’s time to move beyond your kitchen table.
Commercial cake businesses in the UK can scale faster, serve more customers, and secure larger contracts, ranging from weddings to wholesale deals.
But growing into a proper cake business also involves premises, permits, inspections, staff, and a strategy.
This guide walks you through everything you need to know to turn your love for baking into a fully-fledged commercial operation.
Why go commercial with your cake business?
There’s only so much you can do at home. Maybe you're maxed out on orders, or your kitchen setup is limiting your creativity. A commercial cake business gives you more space, more control over production, and more legitimacy.
Going commercial is about unlocking new levels of growth, professionalism, and opportunity. It means:
- Producing at scale with professional ovens, mixers, and cooling equipment
- Meeting higher food safety standards, which boosts trust with retailers and clients
- Working with staff in a safe, spacious, and legally compliant environment
- Pitching to larger clients like cafes, event planners, or even supermarket buyers
Many bakers also find that a commercial setup gives them the confidence to experiment with new ranges, develop a signature look, or improve their workflow, from ingredient sourcing to packaging.
Understanding the market
Before you scale up your cake business, take time to understand your market. This helps you avoid overcommitting and ensures that your move to commercial premises is driven by demand, not just ambition.
UK baking market at a glance
- The cakes, pastries, and sweet pies market in the UK was worth £3.79 billion in 2023 and is expected to grow at over 3% CAGR through 2028.
- The market includes both packaged supermarket goods and unpackaged artisanal bakes, which offers room for both high-volume suppliers and niche cake creators.
Who buys cakes?
- Nearly 45% of adults aged 18 – 34 across Europe buy bakery items daily. Even older adults (34+) continue purchasing regularly, with about one-third buying daily.
- Despite inflation, many consumers still treat themselves to indulgent cakes, especially those seen as high-quality or occasion-worthy.
Popular cake categories:
- Supermarkets are seeing strong sales in celebration and premium cakes, including branded products like Cadbury Flake Celebration Cake and Thorntons Triple Layer Chocolate Cake.
- Small artisanal bakeries contribute fresh, unpackaged cakes to supermarket shelves, offering unique flavours and handmade appeal.
- Trending flavours in 2025 include Middle Eastern (rosewater, pistachio), African (hibiscus, baobab), and global street-food-inspired combinations.

Cakes for religious and cultural celebrations:
- Christmas: Fruitcake, mince pies, yule logs
- Easter: Simnel cakes, hot cross buns
- Ramadan & Eid: Pistachio, date, and rosewater cakes
- Diwali: Sweets and fusion cakes with saffron, cardamom, and nuts

These holidays represent key seasonal revenue opportunities. Planning your cake calendar around them can help maintain a steady production flow throughout the year.

Legal requirements & company setup
Do you need to register a company to start a cake business in the UK?
If you’re going commercial, yes – registering your business properly isn’t optional. You can trade as a sole trader, but many cake business owners find that forming a limited company offers more benefits as they grow.
It’s not just about appearing professional (though that helps when pitching to event planners or corporate clients).
Going LTD means your personal finances are separate, and you get access to extra protections and tax benefits. It also signals to suppliers and venues that you’re a serious operator.
💡 If you’re not sure how to register, ANNA can take care of the whole process – including setting up your business account and registering you for VAT when the time comes.
Licenses and Compliance: Don’t skip these
Before you sell your first professionally baked cupcake, make sure you’re properly registered:
1. Register with your local council as a food business. This is free and must be done at least 28 days before trading.
2. Get inspected by Environmental Health to check your premises meet hygiene standards. Don’t worry – they’re not looking for perfection, but they do want safe, clean conditions.
3. Complete a food hygiene course. Level 2 is the basic requirement if you’re handling food; Level 3 is great if you’ll be managing staff or training others.
4. Understand allergen labeling laws. No matter if you're selling boxed brownies or bespoke wedding cakes, you need to clearly list any allergens (like eggs, milk, or nuts) and keep your records up to date.
📌 Even items like edible glitter, metallic dust, and fresh flowers must be food-safe and approved. Always check your suppliers and ingredients list.

What insurance do you need?
Insurance isn’t glamorous, but it’s your safety net. Here's what most cake businesses need:
- Public liability insurance – For accidents involving customers, delivery drivers, or anyone else visiting your premises.
- Product liability insurance – In case someone has a reaction or gets ill from your products.
- Employers’ liability insurance – This is a legal must if you hire anyone, even part-time.
- Contents or stock insurance – To cover expensive equipment or ingredients in case of fire, theft, or spoilage.
Costs & finances
Starting a cake business from commercial premises is a bigger financial commitment than baking from home, but it also opens up bigger revenue opportunities. The key is knowing what to expect so you can plan and budget confidently.
Startup costs: What to expect
The exact cost of starting a commercial cake business will depend on the size of your operation and whether you're renting a ready-to-go kitchen or fitting out your own unit.
Here's a rough breakdown:

Monthly operating costs
Once you're up and running, your recurring costs will include:
- Rent and utilities (electricity, water, gas): £500 – £1,500/month
- Ingredient and packaging restock: £400 – £1,000/month depending on volume
- Staff wages (if hiring): From £1,400/month per full-time employee
- Insurance and subscriptions: £100 – £300/month
- Marketing spend (ads, photoshoots, seasonal campaigns): £100 – £400/month
- Waste disposal, pest control, delivery fuel: £100 – £300/month
💡 Use a dedicated business account and expense tracking tool (like ANNA) to separate personal and business finances and stay on top of tax deadlines.
Pricing strategy: Charge for the cake and your time
When setting prices, consider all your overheads, not just the cost of flour and butter.
Here's a simple formula to build your base price:
Ingredients + Packaging + Labor + Overheads + Profit = Final Price
For example, if a 6” celebration cake costs you £7 in ingredients, takes 1.5 hours to make, and your hourly rate is £15, that’s £22.50 in labor.
Add £5 for overheads (rent, electric, admin) and £5 profit, and your cake should sell for around £40.
✅ Include buffer room in your prices to cover last-minute changes, rework, or seasonal ingredient price increases. Offer tiered pricing for basic vs. premium finishes, and use minimum order values to make small jobs worthwhile.
Profit margins and earnings potential
Most custom cake businesses aim for a gross profit margin of 60–70% after direct costs.
- If you’re doing £2,000 – £3,000/month in orders, your take-home (before tax) could be £800 – £1,500 depending on your setup and staff.
- Supplying local cafes or stores may yield lower per-unit margins but higher, steadier volumes.
- If you’re planning on scaling, build in margin to reinvest, whether that’s new equipment, marketing, or part-time help.
Client acquisition strategy
Your cakes might stop people in their tracks, but it’s your brand that brings them back.
✨ Know what you stand for
Why did you start baking? What do your cakes say about you? Maybe it’s the way you honour family recipes, your obsession with seasonal flavours, or your zero-waste values. Get clear on your story and bake it into everything you do.
✨ Look like you mean it
Your logo, colours, and fonts: they should all feel like your bakery. Whether that’s playful and pastel or bold and moody, keep it consistent. People should recognise you at a glance.
✨ Talk like a human
No corporate waffle. Speak how you speak – warm, cheeky, poetic, whatever feels true. Your voice is an integral part of the experience, from Instagram captions to thank-you notes.
✨ Make it personal
Tell people why you do what you do. Share a snapshot of your process, a favourite customer moment, or a baking fail that made you better. That’s the stuff that sticks.
✨ Add your signature
It might be your cake toppers, your handwritten notes, or your packaging that smells like vanilla beans. Give people something to remember you by and something only you do.

Taxes, accounting & compliance
What changes when your cake business gets serious?
When you’re baking casually, maybe you just log a few payments and stash some receipts in a folder. But when you go commercial (register a company, rent premises, or take on big clients) the tax and compliance game shifts entirely.
Here’s what you’re now expected to handle:
- Keep full, accurate business records (not just your Instagram feed of cake photos)
- Track and report income and expenses and hold onto every receipt
- Register for and file VAT if your sales go above £90,000 in a 12-month period
- Meet annual deadlines for Self Assessment or Corporation Tax, depending on your structure
- Log food supply and ingredient batches (yes, even icing sugar counts)
You can’t wing this stuff. Missing a deadline or submitting messy accounts can lead to penalties, and that’s money better spent on literally anything else.

💡For more practical info on fiscal year and dates you shouldn’t miss, check out our The 2025/2026 Tax Year Calendar for LTDs [UK Full Guide].
What do you need to track?
If you want to stay out of trouble (and know whether your cakes are even profitable), here’s what to log from day one:
- Every sale and invoice – whether it’s cash, bank transfer, or card
- All receipts and expenses, from petrol to parchment paper
- Mileage logs for deliveries or supply runs
- Supplier details and batch logs (important for allergen tracking)
- Bank statements matched to transactions
Trying to backfill all this at the end of the year? That’s how you end up crying into your spreadsheets.
Where ANNA +Taxes steps in
Most bakers didn’t get into this to become accountants. That’s where ANNA +Taxes is genuinely helpful.
It’s a smart, automated service built for people running real businesses – like cake makers – who want to do things properly without hiring a full finance team.
Here’s what ANNA +Taxes takes off your plate:
- Walks you through registering with HMRC and setting up VAT/PAYE
- Tracks income and expenses automatically using your business account
- Scans receipts with your phone and matches them to transactions
- Reminds you of every deadline with a built-in tax calendar
- Files your VAT and Corporation Tax returns (accurately, and on time)
- Gives you a Bookkeeping Score so you can improve record-keeping
- Reserves your tax money automatically in Pots, so you don’t spend it accidentally
- Offers answers to any tax-related questions from Tax Terrapin, a clever little AI assistant
And the best part? It starts from just £3/month for the first 3 months. That’s less than you’d spend on packaging tape or cake toppers and it saves you hours of admin.
Conclusion
Ready to build something that lasts?
Getting serious about your cake business means setting things up properly, knowing your numbers, staying compliant, and running with the kind of confidence that only comes from being in control.
Most bakers underestimate how much time admin will take until it starts slowing everything down. Missed deadlines, messy records, and last-minute tax stress aren’t just frustrating, they also hold you back from growing.
Ready to start your cake business without the stress?
Set up your cake business the smart way with ANNA:
💫 Register your company the easy way (for free!)
Open a business account and register your Limited Company with Companies House in one go — for free!
- Choose your company name
- Fill out a few details
- Get your Certificate of Incorporation in hours
It’s fast, fuss-free, and comes with all the support you need.
💫 Keep your business finances sorted from Day 1
- Open a business account in 10 minutes and get tools that actually help:
- Snap receipts, auto-sort expenses
- Create professional invoices with built-in payment links
- Track your money with instant notifications and smart tax pots
- Access help anytime with ANNA’s 24/7 UK-based team
- Miaowing card included (yes, really)
- Plans start at £0/month — you only pay for what you use.
💫 Want all your taxes handled too?
Try ANNA +Taxes — your smart tax sidekick that handles bookkeeping, VAT, Corporation Tax, and payroll.
It’s like having an accountant in your pocket (without the awkward small talk).
Let ANNA handle the boring stuff — so you can focus on baking joy.
Open a business account in minutes
