To close a limited company in the UK, solvent companies with little left to distribute usually file a voluntary strike off (form DS01, £13 online), while solvent companies with over £25,000 to distribute usually use a members’ voluntary liquidation (MVL) for capital tax treatment. Insolvent companies need a creditors’ voluntary liquidation (CVL) instead.
Pick the wrong route and you can pay far more tax than needed, or find the closure blocked by HMRC or a creditor. Pick the right one, and a straightforward closure can be finished in about three months for £13 in Companies House fees.
Which route fits your company?
| Route | Best for | Typical cost | Typical time | Who runs it |
|---|---|---|---|---|
| Voluntary strike off (DS01) | Solvent company, stopped trading, £25,000 or less left to distribute | £13 online / £18 on paper | About 3 months | The directors |
| Members’ voluntary liquidation (MVL) | Solvent company with more than £25,000 to distribute, or complex assets | £2,000–£5,000+ in insolvency practitioner fees plus VAT | 3–6 months | A licensed insolvency practitioner |
| Creditors’ voluntary liquidation (CVL) | Company that cannot pay its debts | Paid from company assets; directors may need to contribute if assets fall short | 12 months or more | A licensed insolvency practitioner |
If you are unsure whether the company can pay every debt in full, take professional advice before filing anything — a strike off for a company with unpaid debts is quickly objected to.
Before you file anything: the close-down checklist
Whichever route you choose, do this tidy-up before the company disappears — afterwards its bank account is frozen and assets are far harder to recover.
- Tell HMRC the company is closing, file final accounts and the final Company Tax Return (CT600), and pay all corporation tax due.
- Deregister for VAT and close the PAYE scheme if the company has them, and settle any final payroll.
- Pay every creditor, supplier and outstanding bill, or agree a settlement in writing.
- Deal with employees properly, including final pay, holiday pay and any redundancy duties.
- Sell or transfer assets, collect money owed to the company, and close contracts and subscriptions.
- Distribute remaining cash to shareholders before dissolution — not after.
- Keep the company’s records after closure: companies generally must keep records for 6 years, and HMRC can still ask questions.
Voluntary strike off (DS01), step by step
Strike off is the cheapest way to close a company that no longer trades and has nothing complicated left in it. The directors apply to Companies House to have the company removed from the register.
1. Check you are eligible
In the 3 months before applying, the company must not have traded or sold stock, changed its name, or done anything other than winding up its affairs or meeting a legal requirement. It must not be threatened with liquidation, and it must have no arrangement with creditors, such as a company voluntary arrangement (CVA).
2. File form DS01
A majority of directors must approve the application. It costs £13 online or £18 on paper, according to GOV.UK’s strike off (DS01) guidance. The online route is cheaper and faster.
3. Notify everyone within 7 days
Within 7 days of filing, you must send a copy of the application to every shareholder, creditor and employee, any director who did not sign it, and any pension fund trustee. Missing someone out is not a technicality — it is a criminal offence, so work from a complete list, not from memory.
4. Wait out the Gazette period
Companies House publishes a notice in The Gazette. Creditors, HMRC and anyone else with an interest then have 2 months to object. If nobody objects, a second Gazette notice confirms dissolution, and the company is usually dissolved about 3 months after the process starts.
5. Understand what dissolution means
From dissolution, the bank account is frozen and any money or assets still in the company’s name pass to the Crown as bona vacantia. They can only be recovered by restoring the company — slow and expensive, generally possible within 6 years, but far costlier than distributing everything first.
The £25,000 tax trap in strike off
When a company is struck off, distributions are normally treated as capital — but only if the total is £25,000 or less. Above that, the whole amount is treated as dividend income.
Worked example: a company with £60,000 left to distribute. Through strike off, the full £60,000 could be taxed as dividends. For a higher-rate taxpayer at the 35.75% dividend rate, that is £21,450 in tax. Through an MVL, the same £60,000 would normally be taxed as a capital gain. After the £3,000 annual CGT exempt amount, tax at the 18% Business Asset Disposal Relief rate would be about £10,260 — a saving of roughly £11,190 before MVL fees. The exact result depends on your base cost, income and reliefs, so treat this as an illustration.
One more trap: if you close a company and start the same or a similar trade within 2 years, HMRC’s anti-avoidance rule can tax MVL distributions as income anyway — take advice first if you plan to carry on the same business.
Members’ voluntary liquidation (MVL), step by step
An MVL is the formal, solvent wind-down. It costs more and takes longer than strike off, but it gives a clean, legally certain finish and capital tax treatment with no £25,000 cap.
- The directors swear a declaration of solvency, confirming the company can pay all its debts in full within 12 months. Making a false declaration is a criminal offence carrying up to 2 years’ imprisonment.
- Shareholders pass a special resolution (75% majority) to wind the company up voluntarily.
- A licensed insolvency practitioner is appointed as liquidator, takes control, realises assets, pays creditors and deals with HMRC.
- Once HMRC clearance is received, the liquidator distributes the surplus to shareholders and files the final returns. The company is dissolved about 3 months after the liquidator’s final return.
MVL fees typically run from £2,000 to £5,000 plus VAT over 3–6 months. As a rule of thumb, once distributable funds pass £25,000, the tax saving usually outweighs the fee — but run the numbers for your own company first.
If the company cannot pay its debts: CVL
A company that cannot pay its debts cannot be struck off to escape them. The right route is a creditors’ voluntary liquidation. The directors initiate it, shareholders pass a resolution, and a licensed insolvency practitioner takes over, sells assets, pays creditors in the legal order of priority, and investigates the directors’ conduct.
Creditors are paid before shareholders, so shareholders usually receive nothing. Directors’ personal guarantees survive liquidation, and trading on while knowing insolvency is unavoidable can create personal liability for wrongful trading — so take advice early.
5 mistakes that delay or undo a closure
- Filing DS01 while the company traded in the last 3 months — even selling off old stock can break eligibility.
- Leaving money, a domain name or equipment in the company’s name at dissolution — it passes to the Crown.
- Forgetting the 7-day notification duty, or notifying only some creditors.
- Leaving a tax return, VAT return or PAYE balance outstanding — HMRC is a frequent objector.
- Trying to strike off a company with debts, hoping nobody notices — creditors can object, and a dissolved company can be restored.
Starting again?
Closing one company does not stop you starting another. If your next venture is a fresh idea rather than the same trade restarted, read our guide on how to register a limited company in the UK before you begin, so the new company is set up cleanly from day one.
Frequently asked questions
How long does it take to close a limited company?
A straightforward strike off usually takes about 3 months from filing DS01 to dissolution, including the 2-month Gazette objection period. An MVL usually takes 3–6 months, and a CVL often takes 12 months or more.
Can I close a limited company with debts?
Not by strike off. A company with debts it cannot pay should go through a creditors’ voluntary liquidation, where a licensed insolvency practitioner deals with creditors properly. Striking off a company to avoid debts invites objections and restoration.
What happens to money left in the company’s bank account after dissolution?
The account is frozen, and the balance passes to the Crown as bona vacantia. It can only be recovered by restoring the company, which is expensive and slow, so distribute all funds before dissolution.
Do I still need to file accounts while closing?
Final accounts and the final Company Tax Return go to HMRC, and all tax must be paid. A confirmation statement is generally not expected while a strike-off application is in progress, but check your filing dates rather than assuming — overdue filings can stall the process.
Conclusion
For a solvent company with little left in it, strike off is quick, cheap and simple: £13 online, a 7-day notification duty, and about 3 months to dissolution. For a solvent company with more than £25,000 to hand back, an MVL usually saves more in tax than it costs. And for a company that cannot pay its debts, a CVL is the only honest route. Do the tidy-up first — pay HMRC and creditors, distribute everything, and only then file.
