Closing or pausing a limited company: questions answered

How you close a company decides whether reserves come out at capital or dividend rates. This hub covers dormancy, strike off, liquidation and the reliefs that apply when you extract the remaining profit.

How do I make my company dormant? Stop all significant accounting transactions, settle debts and close payroll and VAT registrations, then tell HMRC the company is dormant for corporation tax. File dormant accounts and a confirmation statement at Companies House each year.

What do I file for a dormant company? Dormant accounts at Companies House within nine months of the accounting reference date, and a confirmation statement each year with the £34 fee. No CT600 is needed once HMRC has treated the company as dormant for corporation tax.

How do I close my limited company? A solvent company with small reserves is usually closed by voluntary strike off using form DS01. Where reserves are substantial, a members' voluntary liquidation is usually cheaper after tax. An insolvent company must use a creditors' voluntary liquidation.

What is the difference between striking off and liquidation? Strike off is a simple administrative dissolution costing a small filing fee, suitable where reserves are under £25,000 and the company is solvent. Liquidation is a formal process run by a licensed insolvency practitioner, required when insolvent and preferable for large reserves.

What is Business Asset Disposal Relief and do I qualify? Business Asset Disposal Relief reduces capital gains tax to 14% on qualifying disposals, subject to a £1m lifetime limit. You generally need 5% of ordinary shares and votes, an officer or employee role, and a trading company, for at least two years.

Is an MVL worth it for extracting retained profits? Usually yes above roughly £30,000 to £40,000 of reserves. An MVL costs a few thousand pounds but gives capital treatment on the whole distribution, against dividend rates of up to 39.35% on anything over £25,000 under a strike off.

Do I need an accountant for my first year's accounts? Yes, in practice. Your first accounting reference date is usually 12 months after incorporation, first accounts are due 21 months after incorporation, and the first corporation tax return is due 12 months after the accounting period ends. An accountant sets these up correctly from day one.

Can I get non-trading company accounts done on a fixed fee? Yes. A non-trading company that is not dormant, for example one holding an asset or with bank interest, still files full accounts and usually a CT600, but the fixed fee is lower than for a trading company because there is far less to process.

How much does it cost to file dormant accounts and a confirmation statement? Companies House charges no fee for dormant accounts and £34 for an online confirmation statement, charged at cost with no VAT. Add a modest accountancy fee for preparing and filing dormant accounts, which is far lower than a trading company package.

What does an accountant do when striking off a limited company, and what does it cost? An accountant clears final corporation tax, deregisters PAYE and VAT, prepares final accounts up to cessation, and confirms reserves are within the £25,000 capital distribution limit before you file form DS01. The Companies House strike off fee is charged at cost with no VAT.

Do I need final accounts and a CT600 before closing my company? Yes. HMRC requires a final CT600 covering the period up to cessation of trade, with any tax paid, and Companies House needs final accounts if the last full accounts do not already cover that period. Skipping this risks HMRC objecting to strike off or the company being restored later.

How do I restore a struck-off company or wind one up properly? A company struck off within the last six years can usually be restored administratively by a former director or member applying to Companies House, or by court order in other cases. A properly run wind-up, settling debts and filing final returns first, avoids the need for restoration altogether.

Should I use a members' voluntary liquidation or just strike off my company? Below around £25,000 of reserves, informal strike off keeps capital tax treatment and avoids liquidator fees. Above that, a members' voluntary liquidation usually saves more in tax than it costs in insolvency practitioner fees, because the whole distribution keeps capital treatment rather than being taxed as a dividend.

Rates, thresholds and deadlines quoted here reflect the 2026/27 UK position and current Companies House and HMRC guidance. Check GOV.UK, or ask us, before relying on them for your own company.