How to close or dissolve a limited company in the UK

Your main options

There are three common ways to deal with a company you no longer need:

• Voluntary strike-off (dissolution): usually the cheapest way to close a solvent company.
• Liquidation: a formal process run by a licensed insolvency practitioner. A members' voluntary liquidation (MVL) is for solvent companies; a creditors' voluntary liquidation is for insolvent ones.
• Make the company dormant: keep it registered but inactive, so you can use it again later.

You usually need agreement from the directors and shareholders whichever route you choose.

Who can use voluntary strike-off?

You can apply to strike off a company if, in the last 3 months, it has not:

• traded or sold off any stock
• changed its name

It must also not be threatened with liquidation, and it must not have any agreement with creditors, such as a Company Voluntary Arrangement (CVA). If these conditions are not met, you will need to look at liquidation instead.

Step by step: striking off a company

1. Stop trading and settle the company's affairs. Pay suppliers, staff and any loans. Close or transfer contracts.
2. Deal with HMRC. Make sure Corporation Tax returns are filed and tax is paid. Close the PAYE scheme if you had employees and deregister for VAT if you were registered.
3. Distribute or deal with remaining assets. Move any money or property out of the company before you apply. Anything left in the company when it is dissolved passes to the Crown (known as "bona vacantia").
4. Close the business bank account once all payments are made.
5. File form DS01 with Companies House. The fee is £13 online. A majority of the directors must sign.
6. Tell interested parties within 7 days. Send a copy of the application to shareholders, creditors (including HMRC), employees, pension trustees and any directors who did not sign.
7. Wait for the Gazette notice. Companies House publishes a notice in The Gazette, which gives people around two months to object.
8. Dissolution. If there are no objections, the company is struck off and dissolved, and a second notice is published.

Keep the company's records after it is dissolved, as you may need them later.

Tax when you take money out

How money taken out on closure is taxed depends on the amount and your circumstances. Broadly, if total distributions on a strike-off are £25,000 or less, they can usually be treated as capital rather than income. If they are above £25,000, the whole amount is normally treated as a dividend. For larger amounts, a members' voluntary liquidation can sometimes be more tax-efficient, despite the cost of a liquidator. Speak to an accountant before you distribute funds.

When liquidation is needed

• Members' voluntary liquidation: the company is solvent, but it has significant assets or the shareholders want a formal, final process.
• Creditors' voluntary liquidation: the company cannot pay its debts. Creditors' claims come before shareholders.
• Compulsory liquidation: a creditor applies to court to wind up the company.

If your company may be insolvent, speak to a licensed insolvency practitioner or solicitor early. Directors have extra duties to creditors when a company is in financial difficulty.

Dormant instead of closed

If you might use the company again, you do not have to close it. A dormant company has no business activity, trading or income. It stays on the register, so you must still file annual accounts and a confirmation statement every year. See our Dormant Company Accounts service for help with this.

Common mistakes

• Applying while the company still has money in the bank, which then goes to the Crown.
• Forgetting to tell HMRC or creditors, which can lead to objections.
• Trading, or changing the company name, within 3 months of applying.
• Not filing overdue accounts or confirmation statements first.

Can a dissolved company come back?

Yes. A dissolved company can sometimes be restored to the register, either by administrative restoration through Companies House (fee £341) or by court order. Restoration is slower and more expensive than closing properly, so it is worth getting the strike-off right first. See our Company Restoration service if you need it.

How Form My Company can help

Our Company Dissolution service costs £180, VAT included. We check that your company meets the conditions, prepare and file the DS01, and give you template letters to notify shareholders, creditors and HMRC. If strike-off is not right for you, we will tell you before you apply.

Frequently asked questions