Closing a solvent company usually means one of two routes. Voluntary strike off is the cheaper option. Members’ voluntary liquidation is the formal one. Strike off costs £13 online and usually takes around three months.
If the order goes wrong, it can get expensive. Any cash left in the company when it is struck off passes to the Crown. The same goes for an HMRC refund that turns up afterwards.
This guide covers the options, the conditions, and the steps you need to finish before you apply.
Quick answer
If the company is solvent and straightforward, use form DS01 to apply for voluntary strike off. It costs £13 online. Clear the debts, pay staff, empty the bank account, and send final accounts to HMRC first. Send a copy of the application to everyone affected within seven days.
What are the options for closing a limited company?
Solvent companies usually choose between voluntary strike off and members’ voluntary liquidation. Insolvent companies use administration, creditors’ voluntary liquidation, or strike off in limited cases. There is also a fourth option: keep the company registered and dormant.
GOV.UK sets the routes out under closing a limited company.
- Voluntary strike off is the simple, low-asset route. It costs £13 online.
- Members’ voluntary liquidation is the formal solvent route for companies with larger reserves. It involves insolvency practitioner fees.
- Creditors’ voluntary liquidation is for insolvent companies. It involves insolvency practitioner fees.
- Administration is for insolvent companies where rescue may still be possible. It involves insolvency practitioner fees.
- Making the company dormant pauses trading without closing it. You still file each year.
Most small companies use strike off. It is the cheapest route and it does not need an insolvency practitioner.
What’s the difference between striking off and liquidation?
Strike off removes the company from the register. You do it yourself, and it costs £13 online. It suits a company with little left in it. Members’ voluntary liquidation is formal. A licensed insolvency practitioner runs it, it costs more, and it suits companies with larger reserves.
Strike off is an administrative act. Nobody looks into the company’s affairs.
An MVL is a formal winding up. A liquidator realises the assets and distributes them to shareholders.
How much money is in the company usually decides the route. Tax treatment on the way out matters too. That varies by case, so take advice before you choose.
If the company cannot pay its debts, neither route applies. Insolvent companies follow a different process.
What conditions must you meet to strike off?
There are four conditions, and all of them must be true for the last three months. The company has not traded or sold stock. It has not changed its name. It is not threatened with liquidation. It has no agreements with creditors, such as a Company Voluntary Arrangement. Fail any one of these and strike off is not open to you.
GOV.UK lists the strike off conditions on the overview page.
The three month clock catches people out. Sell your last piece of equipment in March and you cannot apply until June.
Selling stock counts as trading. So does invoicing one final client. Plan the last three months of the company’s life carefully.
What do you do before you apply?
Settle everything first. Pay creditors. Make staff redundant properly and pay final wages. Tell HMRC you have stopped employing people. Send final statutory accounts and a Company Tax Return to HMRC. Pay any tax that is still due. Then share the remaining assets among the shareholders.
GOV.UK covers this under what to do before you apply.
Do it in this order:
- Stop trading. Note the date. The three month clock starts here.
- Collect what you are owed. Chase final invoices while the company still exists.
- Pay creditors. Suppliers, loans, anything outstanding.
- Deal with staff. Follow redundancy rules and pay final wages.
- Close the payroll scheme. Tell HMRC the company has stopped employing people.
- Deregister for VAT. If you are registered, cancel it.
- Final accounts and tax return. Send both to HMRC and pay the tax.
- Empty the company. Share the assets among shareholders before you apply.
- Close the bank account. Do this after everything else.
That last step is the one people miss, and it can cost money later.
Your normal filing duties run right up to the point of strike off. Miss one now and you still get a penalty. We set out the Companies House obligations for directors in full.
How do you apply for voluntary strike off?
File form DS01 with Companies House. A majority of the directors sign it. The fee is £13 online and £18 on paper. Within seven days you send a copy to everyone affected. Companies House publishes a notice in The Gazette. The company goes once two months pass.
The seven day rule is a legal duty, not a courtesy. Send a copy to:
- members, which usually means the shareholders
- creditors
- employees
- managers or trustees of any employee pension fund
- any director who did not sign the application
GOV.UK sets this out under apply to strike off. The current Companies House fees put the digital application at £13. Paper costs £18.
The two month notice period gives anyone affected time to object. A creditor who objects can stop the strike off.
Total time is usually around three months from application to removal.
What happens to money left in the company?
Anything still in the company when it is struck off passes to the Crown. That includes the bank balance. It also includes any payment received later, such as an HMRC refund. Getting it back means restoring the company through the courts.
This is the single most expensive mistake in the whole process.
Two things commonly get left behind. A few hundred pounds in a forgotten account is one. A Corporation Tax refund landing after the company has gone is the other.
Both are avoidable. Distribute everything to shareholders before you apply, and check whether any refund is due.
If a refund might arrive, wait for it. The three month wait is cheaper than a court restoration.
What tax do you pay when you close a company?
The company pays its final Corporation Tax bill in the normal way. How shareholders are taxed on what is left depends on the route. The amount involved matters too. Capital treatment and income treatment carry very different rates. That varies by case, so get advice before you distribute anything.
The company side is straightforward. Send the final accounts, the final Company Tax Return, and the final tax payment.
The shareholder side is not straightforward. The amount, the route, and your own circumstances all affect the answer.
That is one reason larger reserves often point towards an MVL rather than a strike off. It is a tax question first, then a process question.
Do not distribute a large balance and ask about the tax later. The order matters.
Should you close it or make it dormant?
Close it if you are finished. Make it dormant if you might trade again, or if you want to keep the name. Dormancy still means a confirmation statement fee and two filings a year. Strike off ends everything. Bringing the same company back needs a court restoration.
Dormancy is the right choice more often than people think. Contract work with gaps is the classic example.
The cost is small and the duties are light. We explain what running a dormant limited company actually involves.
Do not just stop filing. That leads to penalties and usually ends in strike off anyway. The assets still go to the Crown.
Many directors close one company and start another later. Restoring an old one costs more. It is often cheaper to incorporate a limited company in the UK again.
Closing cleanly
Set the stop trading date first and work backwards from it. Everything else follows that date.
Empty the company before you file DS01. Bank balance, assets, refunds, all of it.
Keep the records. Company records still need to be kept for six years after the company is gone. HMRC can still ask.
We also handle the final accounts on the way out. DASA’s company formation service sets up the new company on the way in. Tell us your stop trading date and what is left in the company. Get a quote and we will send you our current pricing.
This article gives general information about closing a UK limited company. It is not financial, tax or legal advice. Closing an insolvent company brings duties this article does not cover. Speak to a qualified accountant or a licensed insolvency practitioner about your own situation.
Frequently asked questions
How do you close a limited company in the UK?
A solvent company applies for voluntary strike off using form DS01, or uses a members’ voluntary liquidation. Strike off costs £13 online. Settle debts, deal with staff, send final accounts to HMRC and empty the company first.
What are the conditions for striking off a company?
Four conditions, all covering the last three months. The company has not traded or sold off stock, has not changed its name, is not threatened with liquidation, and has no agreements with creditors.
Who do you have to tell when you apply to strike off?
Within seven days of applying you send a copy to members, creditors, employees, managers or trustees of any employee pension fund, and any director who did not sign the application form.
What happens to money left in a company when it is struck off?
It passes to the Crown. That includes the bank balance and any payment received later, such as an HMRC refund. Getting it back means restoring the company through the courts, which costs far more.
How long does it take to strike off a company?
Around three months. Companies House publishes a notice in The Gazette, and the company is struck off once the two months in that notice have passed. A creditor who objects can stop the process.