How to Close a Limited Company in 2026: Strike-Off, Liquidation and Tax

Closing a limited company properly takes more than stopping work and ignoring the post. Companies House will strike off a company that stops filing, but that leaves the directors exposed, and any cash still in the bank goes to the Crown. This guide is for directors and shareholders of solvent and struggling UK companies who want to close in 2026. It covers the routes — voluntary strike-off, members' or creditors' voluntary liquidation, or simply going dormant — and what each costs. It also explains the tax on getting your money out, including the £25,000 rule and Business Asset Disposal Relief at 18% from April 2026.

Quick answer

Most small, solvent companies close by voluntary strike-off: stop trading, settle debts and tax, distribute the assets, then apply to Companies House online for £13 (or £18 on paper form DS01). The company is dissolved about 2 months after a Gazette notice if nobody objects. If you're distributing more than £25,000, a members' voluntary liquidation usually gives better tax treatment. If the company can't pay its debts, you need a creditors' voluntary liquidation.

• You can only strike off if the company hasn't traded or changed its name in the last 3 months

• Send a copy of the application to shareholders, creditors, employees and other directors within 7 days

• Final accounts and a Company Tax Return go to HMRC, not Companies House

• Anything left in the company when it's dissolved, including later HMRC refunds, goes to the Crown

• Business Asset Disposal Relief rate: 18% from 6 April 2026 (was 14%)

Your options for closing a limited company

The right route depends on two questions: can the company pay all its debts, and how much money is left for the shareholders?

Ways to close a UK limited company

Route	Best for	Official cost	Who runs it
Voluntary strike-off (DS01)	Solvent companies with little left to distribute	£13 online / £18 paper	The directors
Members' voluntary liquidation (MVL)	Solvent companies with significant reserves to pay out	Insolvency practitioner fees and Gazette costs	A licensed insolvency practitioner
Creditors' voluntary liquidation (CVL)	Companies that can't pay their debts	Insolvency practitioner fees, often paid from company assets	A licensed insolvency practitioner
Going dormant	Owners who may restart, or want to keep the name	£50 confirmation statement each year, plus dormant accounts	The directors

Voluntary strike-off (DS01)

Best for

Solvent companies with little left to distribute

Official cost

£13 online / £18 paper

Who runs it

The directors

Members' voluntary liquidation (MVL)

Best for

Solvent companies with significant reserves to pay out

Official cost

Insolvency practitioner fees and Gazette costs

Who runs it

A licensed insolvency practitioner

Creditors' voluntary liquidation (CVL)

Best for

Companies that can't pay their debts

Official cost

Insolvency practitioner fees, often paid from company assets

Who runs it

A licensed insolvency practitioner

Going dormant

Best for

Owners who may restart, or want to keep the name

Official cost

£50 confirmation statement each year, plus dormant accounts

Who runs it

The directors

There's also compulsory strike-off, where Companies House removes a company that has stopped filing accounts or confirmation statements. Don't treat it as a cheap way out. Directors still commit offences by not filing, any cash left goes to the Crown, and creditors and HMRC can object and keep the company alive.

For an insolvent company, GOV.UK also lists administration and a company voluntary arrangement (CVA). Those are rescue tools rather than closures, and they need an insolvency practitioner.

Can you strike off your company?

Striking off — also called dissolving — is usually the cheapest way to close a solvent company. Companies House will only accept it if, in the last 3 months, the company:

• hasn't traded or sold off any stock
• hasn't changed its name

The company also must not be threatened with liquidation and must not have an agreement with creditors, such as a CVA. If any of those apply, you'll have to use a liquidation instead.

"Trading" is wider than many directors expect. Invoicing a last client, selling the company van or receiving payment for earlier work can all restart the 3-month clock. Plan the wind-down so the last real activity happens well before you apply. Paying final bills and closing the bank account is fine — that's part of winding up, not trading.

If there's no director — for example, the sole director has died — the shareholders must appoint one before the company can be closed. If the sole director has died, their executor can make that appointment.

Before you apply: closing the company down properly

Companies House expects you to close the business down legally before you file the DS01. Most problems after a strike-off come from skipping this stage.

Tell people. Within 7 days of applying, you must send a copy of the application to everyone who could be affected: shareholders, creditors, employees, managers or trustees of any employee pension fund, and any directors who didn't sign the form. Failing to do this is an offence that can lead to a fine and prosecution.

Deal with employees and payroll. Follow redundancy rules if you're letting staff go, pay their final wages, send a final Full Payment Submission and tell HMRC the company has stopped employing people so the PAYE scheme can close.

Close down VAT. If the company is VAT-registered and won't trade again, cancel the registration. When a company goes dormant without intending to trade again, GOV.UK says you must deregister within 30 days. File the final VAT return, which may include VAT on stock and assets you keep. Our VAT registration guide explains the thresholds.

Prepare final accounts and the Company Tax Return. You must send final statutory accounts and a Company Tax Return (CT600) to HMRC, stating that these are the final trading accounts and that the company will soon be struck off. You don't have to file final accounts with Companies House for a voluntary strike-off. You do need to file any accounts that were already overdue. Pay all Corporation Tax and other tax owed. If the company made a loss in its final year, terminal loss relief may let you set it against profits of earlier years and claim a refund. Make sure that refund arrives before dissolution, or it goes to the Crown. See our Corporation Tax guide for rates and deadlines.

Settle debts and the director's loan account. Pay suppliers, HMRC and lenders. If a director owes the company money, repay it or formally write it off (which has its own tax consequences) before closing. Lenders, including on Bounce Back Loans, are creditors who can object.

Distribute what's left. Share any remaining cash and assets among the shareholders before applying. Close the company bank accounts and transfer anything in the company's name, such as domain names, vehicles and intellectual property. Once the company is dissolved, everything left in its name passes to the Crown as bona vacantia. That includes future payments, such as an HMRC refund or a deposit returned by a landlord.

Keep records. Keep business documents, such as bank statements, invoices and receipts, for 7 years after the company is struck off. If the company employed people, keep copies of its employers' liability insurance policy and schedule.

Before you file the DS01

0/7

• No trading, stock sales or name change for 3 months
• Final payroll run, final FPS and PAYE scheme closed
• VAT registration cancelled and final VAT return filed
• Final accounts and CT600 sent to HMRC and Corporation Tax paid
• Suppliers, lenders and HMRC paid; director's loan account cleared
• Cash and assets distributed; bank account closed; domains and vehicles transferred
• List of shareholders, creditors, employees and pension trustees to send copies to within 7 days

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How to apply to strike off (DS01)

Strike off a solvent company

1. 1

   Check the company qualifies

   No trading, stock sales or name change in the last 3 months; no threatened liquidation; no CVA.

2. 2

   Finish the close-down

   Final accounts and CT600 to HMRC, tax paid, payroll and VAT closed, debts settled, assets distributed, bank account closed.

3. 3

   Apply online or on form DS01

   The online service costs £13 by card and checks your application as you go. The paper DS01 costs £18, takes longer, and you can't pay with a cheque from the company's own account. A majority of the directors must sign.

   Close a company (DS01)
4. 4

   Send copies within 7 days

   Shareholders, creditors, employees, pension trustees and any directors who didn't sign.

5. 5

   First Gazette notice

   Companies House writes to confirm the form is correct and publishes a notice in The Gazette. The 2-month objection period starts.

6. 6

   Dissolution

   If nobody objects, the company is struck off after the 2 months and a second Gazette notice confirms it no longer exists.

If circumstances change while the application is pending — the company starts trading again or becomes insolvent — you must withdraw it. Use the online service or form DS02. Only one director needs to sign. You can also withdraw simply because you've changed your mind, as long as the company is still on the register.

Making a dishonest application, such as declaring that creditors have been told when they haven't, is a criminal offence.

Tax when you take the money out

This is where the choice between strike-off and liquidation really matters.

The £25,000 rule for strike-offs

If the company is struck off, distributions to shareholders in anticipation of the strike-off can be treated as capital — and taxed under Capital Gains Tax — only if the total is £25,000 or less. If the total goes over that limit, the whole amount, not just the excess, is taxed as a dividend at the dividend rates of 10.75%, 35.75% and 39.35%. This rule is in section 1030A of the Corporation Tax Act 2010, and GOV.UK's strike-off guide summarises it.

Members' voluntary liquidation

In an MVL, the liquidator's distributions to shareholders are normally capital, whatever the amount. Gains above the £3,000 annual exempt amount are taxed at 18% or 24%, depending on your income. If you qualify for Business Asset Disposal Relief (BADR), the rate is 18% for disposals from 6 April 2026. It was 14% in 2025 to 2026 and 10% before that.

To qualify for BADR on shares, for at least 2 years up to the disposal you must have been an officer or employee, the company must have been a trading company, and you must have held at least 5% of the shares and voting rights. If the company has stopped trading, the disposal must happen within 3 years of the trade ending. There's a lifetime limit of £1 million of gains. You claim through your Self Assessment return. BADR can also apply to capital distributions of up to £25,000 on a strike-off.

Worked example: £40,000 left in the company

Priya owns 100% of a consultancy company that has stopped trading. After paying all tax and bills, the company has £40,000 in the bank. She has other income of £55,000, so she's a higher-rate taxpayer. She has run the company for six years, so she meets the BADR conditions.

• Strike-off, distributing £40,000: the total is over £25,000, so all of it is a dividend. After the £500 dividend allowance, (£40,000 − £500) × 35.75% = about £14,120 of tax.
• MVL: assume liquidator costs of £3,000 (an estimate), leaving £37,000 to distribute. Less the £3,000 exempt amount, £34,000 × 18% = £6,120 of tax. Even after fees, Priya keeps roughly £5,000 more than with the strike-off.
• Smaller company, £24,000 left: strike-off works well. The distribution is under the limit, so it's capital: (£24,000 − £3,000) × 18% = £3,780, with only the £13 fee to pay.

The figures are simplified. They ignore the company's base cost in the shares and other gains you've made in the same tax year, so get your accountant to run your actual numbers. As a rough guide, once reserves go much over £25,000, price up an MVL.

Priya's tax on £40,000 of reserves (illustration)

£14,120

Strike-off — taxed as a dividend

35.75% upper rate

£6,120

MVL — capital with BADR

18% after £3,000 exempt

£3,000

Assumed MVL fees

Estimate, varies by firm

Watch out for the anti-avoidance rule

The capital treatment isn't guaranteed. A targeted anti-avoidance rule (TAAR) in section 396B of the Income Tax (Trading and Other Income) Act 2005 can turn a winding-up distribution back into income. It applies where you held at least 5% of the company, it was a close company, and within 2 years of the distribution you carry on or are involved in the same or a similar trade or activity. The final condition is that it's reasonable to assume that one of the main purposes of the winding up was to avoid Income Tax. HMRC's Company Taxation Manual (CTM36300 onwards) explains how it applies the rule.

In practice, a contractor who closes one company, takes the reserves as capital and opens an identical company the following month is the target. Retiring, or genuinely changing career, isn't.

Members' and creditors' voluntary liquidation

MVL — for solvent companies

An MVL suits a solvent company whose owners want to retire, step back from a family business or simply stop. The steps on GOV.UK are:

Members' voluntary liquidation step by step

1. 1

   Declaration of solvency

   The directors state, with a list of assets and liabilities, that the company can pay its debts with interest within no more than 12 months. A majority of directors sign in front of a solicitor or notary public.

2. 2

   Shareholders' resolution

   Within 5 weeks, shareholders pass a resolution for voluntary winding up at a general meeting.

3. 3

   Appoint the liquidator

   At the same meeting, they appoint a licensed insolvency practitioner.

   Find an insolvency practitioner
4. 4

   Gazette and Companies House

   Advertise the resolution in The Gazette within 14 days and send the signed declaration to Companies House within 15 days.

The liquidator then takes control. They collect the assets, pay creditors, deal with HMRC and distribute the rest to shareholders. Fees aren't set by government. Insolvency firms commonly quote somewhere around £2,000 to £5,000 for a straightforward MVL, plus disbursements such as Gazette notices and the liquidator's bond — treat that as an estimate and get two or three quotes.

Signing a declaration of solvency without reasonable grounds is an offence, so be sure the numbers stack up first.

CVL — when the company can't pay its debts

If the company is insolvent, the directors' duties shift: creditors' interests come before shareholders'. A director can propose a creditors' voluntary liquidation. Shareholders holding 75% by value of the shares must vote for a winding-up resolution. The company then appoints an insolvency practitioner as liquidator, sends the resolution to Companies House within 15 days and advertises it in The Gazette within 14 days.

The liquidator will investigate how the company was run and report on the directors' conduct. If you've taken out a personal guarantee, for example on a lease or loan, the lender can still pursue you personally. Get advice from a licensed insolvency practitioner early, before taking money out or paying some creditors ahead of others.

The dormant alternative

If you might restart, want to keep the company name, or are waiting for a final payment, you can make the company dormant instead of closing it. A company is usually dormant for Corporation Tax if it has stopped trading and has no other income. Tell HMRC, and you won't have to file Company Tax Returns unless HMRC sends you a notice to deliver one.

A dormant company still costs time and money. It must file a confirmation statement each year (£50 online) and annual accounts. If it had no significant transactions in the year and qualifies as small, these can be simple dormant accounts with no auditor's report. Directors must also keep up with Companies House requirements such as identity verification. If you don't plan to trade again, deregister for VAT within 30 days and close the PAYE scheme.

Dormancy makes sense for a year or two of uncertainty. If you're sure you're finished, a strike-off avoids years of filings.

Objections: what can stop a strike-off

Once the first Gazette notice is published, shareholders and other interested parties — most often creditors — can object to Companies House. They need evidence, such as unpaid invoices showing the company owes them money, or proof that it's still trading. Objections must reach Companies House before the 2-month notice expires. HMRC, councils and lenders routinely object when money is owed.

If an objection succeeds, the company won't be struck off for another 6 months. The objector can ask for more time if they've started legal action. If they don't, and the company still meets the conditions, it's struck off at the end of that period. The fix is usually simple: pay the debt or agree terms, and the creditor withdraws the objection.

After dissolution: restoration and director liability

Once a company is dissolved, it no longer exists. Its bank accounts are frozen and anything left in its name belongs to the Crown.

What happens after you apply

Day 0

DS01 filed online or by post; copies sent within 7 days

About 1–2 weeks

First Gazette notice published (online applications are faster)

First notice + 2 months

Company struck off if no objection; second Gazette notice

Up to 6 years

Administrative restoration possible if the company was trading when dissolved

7 years

Keep business records for this long after strike-off

Restoration. If you discover an asset you forgot, or need the company back, a former director or shareholder can apply to Companies House for administrative restoration. This is only possible within 6 years of dissolution, and only if the Registrar struck the company off while it was still trading. You send form RT01 with a £341 fee, any overdue accounts and confirmation statements, filing fees and penalties, and a waiver letter from Bona Vacantia if the company had assets. In other cases — including most voluntary strike-offs — you need a court order to restore the company.

Director investigations. Since December 2021, the Insolvency Service can investigate and disqualify directors of dissolved companies without restoring them first. The government's own review says most disqualifications under these powers so far have involved Bounce Back Loan abuse. Dissolving a company to dodge its debts can lead to a ban of up to 15 years and a compensation order.

Common mistakes when closing a limited company

• Leaving money in the bank. A forgotten £2,000 or a late HMRC refund goes to the Crown, and restoring the company costs more than it's worth.
• Distributing just over £25,000 before a strike-off. The whole amount becomes a dividend. Either keep under the limit or use an MVL.
• Trading within the last 3 months. Even a small final invoice can make the application invalid.
• Not telling creditors. It's an offence and invites objections.
• Missing the final CT600. HMRC can object to the strike-off, and late-filing penalties of £200 and upwards still apply.
• Starting a near-identical company soon after an MVL. The TAAR can turn your capital distribution back into income.

Official GOV.UK and Companies House links

• Closing a limited companyOverview of every option
• Strike off your limited companyConditions, who to tell, final accounts
• Close a company online or on form DS01£13 online, £18 paper
• Liquidate your limited companyMVL and CVL steps
• Find an insolvency practitionerLicensed practitioners
• Business Asset Disposal ReliefRates and eligibility
• Dormant companiesAlternative to closing
• Restore your dissolved companyRT01 and court restoration

What to do next

List what's left in the company — cash, assets, debts and the director's loan account — and decide whether the total distribution will be above or below £25,000. If it's below and the company is solvent, wind down, file the final CT600 and apply to strike off online. If it's above, get quotes for an MVL and compare them with the tax saving. If the company can't pay its debts, speak to an insolvency practitioner before doing anything else. Starting again as a sole trader? Compare the structures in our sole trader vs limited company guide, and plan your personal cash flow with the budget planner.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

How much does it cost to close a limited company?

Striking off a solvent company costs £13 online or £18 on paper form DS01, plus your accountant's fee for final accounts and the Company Tax Return. A members' voluntary liquidation needs a licensed insolvency practitioner. Advisers commonly quote around £2,000 to £5,000 for a simple case, but that's an estimate and fees vary with the company's assets and complexity.

How long does it take to strike off a company?

Once Companies House accepts the DS01, it publishes a notice in The Gazette. If nobody objects, the company is struck off after the 2 months stated in the notice, and a second Gazette notice confirms the dissolution. Allow 3 months or more in total, plus the time it takes to wind down beforehand: you can't apply until the company has stopped trading for 3 months.

Can I take the money out of my company when I close it?

Yes, but how it's taxed depends on the route. With a strike-off, if the total distributed in connection with the closure is £25,000 or less, it can be taxed as a capital gain. Above that, the whole amount is taxed as a dividend. In a members' voluntary liquidation, distributions are normally capital, and Business Asset Disposal Relief can cut the rate to 18%.

Can I close a limited company with debts?

You can't use strike-off to walk away from debts. Creditors can object, and you must send them a copy of your application within 7 days. If the company can't pay its debts, the usual route is a creditors' voluntary liquidation through an insolvency practitioner. Since December 2021, the Insolvency Service can investigate and disqualify directors of dissolved companies.

Do I need to file final accounts with Companies House?

For a voluntary strike-off, you don't have to file final accounts with Companies House. But you must send final statutory accounts and a Company Tax Return to HMRC, marked as the final trading period, and pay any Corporation Tax due. Any accounts that were already overdue at Companies House must still be filed.

Can a dissolved company be restored?

Yes. A former director or shareholder can apply to Companies House for administrative restoration within 6 years of dissolution if the company was trading when it was struck off. You send form RT01 with a £341 fee, any overdue documents and penalties, and a Bona Vacantia waiver if it had assets. Otherwise, you need a court order.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 7 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

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4. 4.Companies House fees — Companies House · accessed 7 October 2026
5. 5.Liquidate your limited company — GOV.UK (Insolvency Service) · accessed 7 October 2026
6. 6.Business Asset Disposal Relief — GOV.UK (HMRC) · accessed 7 October 2026
7. 7.Capital Gains Tax rates — GOV.UK (HMRC) · accessed 7 October 2026
8. 8.CTM36300 — Company winding up TAAR — HMRC internal manual · accessed 7 October 2026
9. 9.Dormant companies and associations — GOV.UK · accessed 7 October 2026
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13. 13.Section 396B ITTOIA 2005: phoenixing TAAR and winding-up distributions explained — Tax Disputes (specialist adviser) · accessed 7 October 2026
14. 14.Guide to liquidation fees for MVL and CVL procedures — Clarke Bell (insolvency practitioners) · accessed 7 October 2026
15. 15.Companies House fees: what's changing from 1 February 2026 — Rapid Formations · accessed 7 October 2026