A dormant company is one that isn't currently trading — but "dormant" means two different things, and mixing them up is where directors go wrong. For Companies House, your company is dormant when it has had no "significant accounting transactions" in the financial year (a few things are allowed, like paying the confirmation statement fee). For HMRC, being dormant for Corporation Tax means the company isn't trading or receiving income. You can be dormant for one and not the other. And dormant does not mean you file nothing: you must still send dormant accounts and the confirmation statement (£50 a year) to Companies House, and tell HMRC — though you generally won't file a Company Tax Return while you're dormant for Corporation Tax. Making a company dormant is a short, deliberate process — stop trading, settle any outstanding transactions, tell HMRC, and keep filing with Companies House.
The rules here are set by Companies House and HMRC and sourced to gov.uk. This is general guidance for directors, not personal tax advice.
What counts as dormant — and why does "dormant" mean two things?
The two definitions come from two different bodies doing two different jobs. Companies House asks whether the company had any significant accounting transactions in its financial year; HMRC asks whether the company is trading for Corporation Tax. Neither one tells the other, which is why a company can pass one test and fail the other.
For Companies House, a significant accounting transaction is any entry that would have to appear in the company's accounts. A short list of things is allowed without breaking dormancy: money the shareholders paid for their shares when the company was formed, fees to Companies House to change the company's name or re-register it, penalties for filing accounts late, and the confirmation statement fee (gov.uk). Almost anything else — a supplier payment, a single sale, even bank interest — counts as a transaction and ends dormancy.
For HMRC, dormant for Corporation Tax means the company is "not trading" — not buying or selling, not carrying on a business, not receiving income (gov.uk). So a company that has wound down its trade is not trading for HMRC, yet if any transaction still has to go into its accounts, it isn't dormant for Companies House. It's why directors keeping a company dormant often pay small costs, such as an accountant's fee, personally rather than from the company account — so no transaction has to appear in the company's own books.
Working out which definition applies to you — and what you can still pay without breaking dormancy — is the part directors get wrong first. Our free guide sets it out alongside the rest of a director's filing duties.
You make a company dormant by stopping activity and telling the right people — it's a sequence, not a single form. Work through it in order so there's a clean date from which the company has no transactions and no trading.
Stop trading and settle outstanding transactions. Invoice everything owed to you, pay your suppliers, and clear anything that would count as a significant accounting transaction, so nothing is flowing through the company from the date you want dormancy to start.
Tell HMRC the company is dormant for Corporation Tax. You can do this online or by phone; HMRC will usually confirm it no longer expects a Company Tax Return while the company is dormant (gov.uk).
Deal with PAYE and VAT. Close your PAYE scheme if you'll have no employees, and cancel or manage VAT registration if you're no longer trading — both can otherwise generate returns and transactions.
Handle the bank account carefully. Many directors close the business account so no interest or charges arise, because even a few pounds of bank interest can break dormancy for Companies House; if you keep it open, watch for anything that moves through it.
Keep filing with Companies House. Dormant accounts and the confirmation statement still fall due each year — dormancy doesn't switch them off.
Getting the timing right — the last transaction, the HMRC notification and the first set of dormant accounts — is where an accountant earns their fee. We can match you with a partner accountant to file your dormant accounts and keep the company compliant while it's paused.
The surprise for the directors we help pause a company is that "dormant" still means filing — the confirmation statement and dormant accounts don't stop just because the trading did. Two filings continue with Companies House: dormant accounts (a simplified set that reflects the company's inactivity) and the confirmation statement, which carries a £50 fee and confirms your company details are up to date. If you're unsure what that second one covers, see our explainer on what a confirmation statement is. Miss either deadline and you risk late-filing penalties and, in time, the company being struck off — the opposite of a tidy pause.
On the HMRC side, once it accepts the company is dormant for Corporation Tax you generally won't file a Company Tax Return — but you must tell HMRC and restart your returns if the company begins trading again. One duty that does not pause is director identity verification: the Companies House checks introduced under the Economic Crime and Corporate Transparency Act still apply to the directors of a dormant company, as our guide to Companies House identity verification for directors explains. If preparing dormant accounts and the confirmation statement each year isn't how you want to spend your evenings, a partner accountant can take it on — see our accountancy overview.
When is dormant the right move — or should you close the company instead?
Dormant suits a pause, not an ending. Keeping a company dormant makes sense when you want to press pause on trading you expect to restart, protect a company or brand name so no one else registers it, or hold an asset while the business isn't active. In each case the company stays on the register, ready to switch back on, and the yearly filings are the price of keeping that option open.
If you're finished for good, closing is usually the better call. Where there's nothing left to distribute, applying to strike the company off the register is simpler and cheaper than paying to keep it dormant. Where there's more than £25,000 to take out of the company, a members' voluntary liquidation (MVL) is often the more tax-efficient route than a strike-off — we walk through both in our guide on how to close a limited company. The honest test: stay dormant if you might use the company again, and close it if you won't.
Dormant is a holding pattern, not an exit — keep the filings ticking over and the company stays yours to switch back on the day you're ready. If pausing rather than closing is your plan, our free guide covers keeping a dormant company compliant alongside every other filing a director owns.
What is a dormant company?
A dormant company is a limited company that isn't currently trading. The term has two meanings: for Companies House it means the company has had no significant accounting transactions in its financial year, and for HMRC it means the company isn't trading or receiving income for Corporation Tax. A company can be dormant under one definition and not the other.
How do I make my company dormant?
Stop trading and settle any outstanding transactions so nothing is flowing through the company, then tell HMRC it's dormant for Corporation Tax, close or manage any PAYE and VAT registrations, and handle the business bank account carefully — even bank interest can break dormancy for Companies House. From then on you keep filing dormant accounts and the confirmation statement each year.
Do I need to tell HMRC if my company is dormant?
Yes. Being dormant for Companies House doesn't tell HMRC anything — you notify HMRC separately that the company is dormant for Corporation Tax. Once HMRC accepts this you generally won't need to file a Company Tax Return, but you must tell them again if the company starts trading.
Do dormant companies need to file accounts?
Yes. A dormant company still files dormant accounts with Companies House every year, plus a confirmation statement that carries a £50 fee. Dormant accounts are simpler than a trading company's, but skipping them risks late-filing penalties and, ultimately, the company being struck off.
Is it worth keeping a dormant company?
It depends on why you're pausing. Keeping a company dormant is worth it to protect a company or brand name, hold an asset, or pause trading you expect to restart. If you're finished for good with nothing to distribute, striking the company off is usually simpler; if there's more than £25,000 to take out, a members' voluntary liquidation is often the better route.
A dormant company is one that isn't currently trading — but "dormant" means two different things, and mixing them up is where directors go wrong. For Companies House, your company is dormant when it has had no "significant accounting transactions" in the financial year (a few things are allowed, like paying the confirmation statement fee). For HMRC, being dormant for Corporation Tax means the company isn't trading or receiving income. You can be dormant for one and not the other. And dormant does not mean you file nothing: you must still send dormant accounts and the confirmation statement (£50 a year) to Companies House, and tell HMRC — though you generally won't file a Company Tax Return while you're dormant for Corporation Tax. Making a company dormant is a short, deliberate process — stop trading, settle any outstanding transactions, tell HMRC, and keep filing with Companies House.
The rules here are set by Companies House and HMRC and sourced to gov.uk. This is general guidance for directors, not personal tax advice.
What counts as dormant — and why does "dormant" mean two things?
The two definitions come from two different bodies doing two different jobs. Companies House asks whether the company had any significant accounting transactions in its financial year; HMRC asks whether the company is trading for Corporation Tax. Neither one tells the other, which is why a company can pass one test and fail the other.
For Companies House, a significant accounting transaction is any entry that would have to appear in the company's accounts. A short list of things is allowed without breaking dormancy: money the shareholders paid for their shares when the company was formed, fees to Companies House to change the company's name or re-register it, penalties for filing accounts late, and the confirmation statement fee (gov.uk). Almost anything else — a supplier payment, a single sale, even bank interest — counts as a transaction and ends dormancy.
For HMRC, dormant for Corporation Tax means the company is "not trading" — not buying or selling, not carrying on a business, not receiving income (gov.uk). So a company that has wound down its trade is not trading for HMRC, yet if any transaction still has to go into its accounts, it isn't dormant for Companies House. It's why directors keeping a company dormant often pay small costs, such as an accountant's fee, personally rather than from the company account — so no transaction has to appear in the company's own books.
Working out which definition applies to you — and what you can still pay without breaking dormancy — is the part directors get wrong first. Our free guide sets it out alongside the rest of a director's filing duties.
You make a company dormant by stopping activity and telling the right people — it's a sequence, not a single form. Work through it in order so there's a clean date from which the company has no transactions and no trading.
Stop trading and settle outstanding transactions. Invoice everything owed to you, pay your suppliers, and clear anything that would count as a significant accounting transaction, so nothing is flowing through the company from the date you want dormancy to start.
Tell HMRC the company is dormant for Corporation Tax. You can do this online or by phone; HMRC will usually confirm it no longer expects a Company Tax Return while the company is dormant (gov.uk).
Deal with PAYE and VAT. Close your PAYE scheme if you'll have no employees, and cancel or manage VAT registration if you're no longer trading — both can otherwise generate returns and transactions.
Handle the bank account carefully. Many directors close the business account so no interest or charges arise, because even a few pounds of bank interest can break dormancy for Companies House; if you keep it open, watch for anything that moves through it.
Keep filing with Companies House. Dormant accounts and the confirmation statement still fall due each year — dormancy doesn't switch them off.
Getting the timing right — the last transaction, the HMRC notification and the first set of dormant accounts — is where an accountant earns their fee. We can match you with a partner accountant to file your dormant accounts and keep the company compliant while it's paused.
The surprise for the directors we help pause a company is that "dormant" still means filing — the confirmation statement and dormant accounts don't stop just because the trading did. Two filings continue with Companies House: dormant accounts (a simplified set that reflects the company's inactivity) and the confirmation statement, which carries a £50 fee and confirms your company details are up to date. If you're unsure what that second one covers, see our explainer on what a confirmation statement is. Miss either deadline and you risk late-filing penalties and, in time, the company being struck off — the opposite of a tidy pause.
On the HMRC side, once it accepts the company is dormant for Corporation Tax you generally won't file a Company Tax Return — but you must tell HMRC and restart your returns if the company begins trading again. One duty that does not pause is director identity verification: the Companies House checks introduced under the Economic Crime and Corporate Transparency Act still apply to the directors of a dormant company, as our guide to Companies House identity verification for directors explains. If preparing dormant accounts and the confirmation statement each year isn't how you want to spend your evenings, a partner accountant can take it on — see our accountancy overview.
When is dormant the right move — or should you close the company instead?
Dormant suits a pause, not an ending. Keeping a company dormant makes sense when you want to press pause on trading you expect to restart, protect a company or brand name so no one else registers it, or hold an asset while the business isn't active. In each case the company stays on the register, ready to switch back on, and the yearly filings are the price of keeping that option open.
If you're finished for good, closing is usually the better call. Where there's nothing left to distribute, applying to strike the company off the register is simpler and cheaper than paying to keep it dormant. Where there's more than £25,000 to take out of the company, a members' voluntary liquidation (MVL) is often the more tax-efficient route than a strike-off — we walk through both in our guide on how to close a limited company. The honest test: stay dormant if you might use the company again, and close it if you won't.
Dormant is a holding pattern, not an exit — keep the filings ticking over and the company stays yours to switch back on the day you're ready. If pausing rather than closing is your plan, our free guide covers keeping a dormant company compliant alongside every other filing a director owns.
What is a dormant company?
A dormant company is a limited company that isn't currently trading. The term has two meanings: for Companies House it means the company has had no significant accounting transactions in its financial year, and for HMRC it means the company isn't trading or receiving income for Corporation Tax. A company can be dormant under one definition and not the other.
How do I make my company dormant?
Stop trading and settle any outstanding transactions so nothing is flowing through the company, then tell HMRC it's dormant for Corporation Tax, close or manage any PAYE and VAT registrations, and handle the business bank account carefully — even bank interest can break dormancy for Companies House. From then on you keep filing dormant accounts and the confirmation statement each year.
Do I need to tell HMRC if my company is dormant?
Yes. Being dormant for Companies House doesn't tell HMRC anything — you notify HMRC separately that the company is dormant for Corporation Tax. Once HMRC accepts this you generally won't need to file a Company Tax Return, but you must tell them again if the company starts trading.
Do dormant companies need to file accounts?
Yes. A dormant company still files dormant accounts with Companies House every year, plus a confirmation statement that carries a £50 fee. Dormant accounts are simpler than a trading company's, but skipping them risks late-filing penalties and, ultimately, the company being struck off.
Is it worth keeping a dormant company?
It depends on why you're pausing. Keeping a company dormant is worth it to protect a company or brand name, hold an asset, or pause trading you expect to restart. If you're finished for good with nothing to distribute, striking the company off is usually simpler; if there's more than £25,000 to take out, a members' voluntary liquidation is often the better route.
