Most small, solvent companies close by applying to strike it off (form DS01, £18) at Companies House — but only if it hasn't traded or sold stock, or changed its name, in the last three months and isn't being threatened with liquidation. Before you file, you have to stop trading, settle any debts, prepare final accounts and a final Company Tax Return for HMRC, and pay any tax owed. The tax trap that catches directors out is the money left in the company: if there's more than £25,000 to take out, a strike-off makes the whole lot a taxable dividend, whereas a Members' Voluntary Liquidation (MVL) lets larger solvent closures be treated as capital instead — often far more tax-efficient, with Business Asset Disposal Relief at 18%. Get the route wrong and an avoidable tax bill follows. Here's how each option works, what it costs, and how to pick.
Figures are for the 2026/27 tax year and sourced to gov.uk and HMRC; they change at each Budget. General guidance, not personal advice — and we connect you with a partner accountant rather than file anything ourselves.
How do you strike off a limited company?
Striking off (also called dissolving) is the cheapest, simplest way to close a solvent company that has stopped trading. You apply on form DS01, which costs £18 to file with Companies House, and you can only use this route if, in the last three months, the company has not traded or sold off stock, not changed its name, and is not threatened with liquidation or bound by a creditor agreement such as a CVA (gov.uk).
Before you apply, the company needs to be properly wound down: stop trading, collect what you're owed, settle outstanding bills, close the payroll and deregister for VAT if relevant, then prepare final accounts and a final Company Tax Return so HMRC can be paid any corporation tax due. You must also tell interested parties — shareholders, employees, creditors and anyone else who could object. Companies House publishes a notice in the Gazette, and after a two-month wait with no objection the company is struck off the register and ceases to exist.
One detail people miss: take the money and assets out before the company is dissolved. Anything left in a struck-off company — cash in the bank, property, even a small balance — passes to the Crown as bona vacantia. Empty the accounts and distribute assets to shareholders first, in the right order, or you simply lose them.
The filing cost is small — £18 for the DS01. The number that actually moves the bill is how the money you draw out is taxed, and that turns on the £25,000 rule.
Under CTA 2010 s1030A, distributions to shareholders on a strike-off are treated as capital — potentially qualifying for Capital Gains Tax treatment and Business Asset Disposal Relief — only if the total distributed is £25,000 or less. Go a pound over £25,000 and the whole amount is taxed as an income distribution (a dividend), at 2026/27 dividend rates of 10.75%, 35.75% or 39.35% depending on your band (gov.uk). That's a cliff edge, not a sliding scale, which is exactly why the route you choose matters.
Where the distribution is taxed as capital, Business Asset Disposal Relief (BADR) can apply to qualifying gains, charging 18% on disposals made on or after 6 April 2026 (the rate rose from 10%, via 14% in 2025/26), up to a £1 million lifetime limit (gov.uk). For a solvent company with a meaningful balance to return, capital treatment at 18% can be considerably cheaper than dividend rates — but only if you close by a route that delivers it.
There's one more trap before you close anything: an overdrawn director's loan account. If you've drawn more from the company than you've put in or been paid, that loan has to be cleared first — you can't just walk away from money you owe the company, and an unsettled balance has tax consequences. Sort it out before you start the closure, and read our explainer on how directors' loans work if you're not sure where you stand.
Strike-off vs MVL vs liquidation — which is right?
The right closure depends on two things: whether the company is solvent (can pay its debts), and how much is left to take out. A clean small balance points to strike-off; a larger solvent balance usually points to an MVL for capital treatment; an insolvent company must not strike off at all.
Route
When it fits
Rough tax treatment
Strike-off (DS01)
Small, solvent, stopped trading; £25,000 or less to distribute
Distributions can be capital (CGT/BADR) if total ≤ £25,000
Members' Voluntary Liquidation (MVL)
Solvent, but more than £25,000 to distribute
Distributions treated as capital — BADR at 18% may apply
Creditors' Voluntary Liquidation (CVL)
Insolvent — can't pay what it owes
Handled by a licensed insolvency practitioner; not a tax-planning choice
An MVL is a formal process run by a licensed insolvency practitioner, so it carries professional fees — worth it when the tax saved on a large capital distribution outweighs the cost, but not for a company with very little left in it. The maths is specific to your figures, which is why this is the point to get a second opinion before you commit. The closures we most often help match an accountant for are the ones with more than £25,000 still in the company: get the route wrong here and an avoidable dividend-tax bill follows.
What if the company has debts or you just want to pause it?
If the company can't pay its debts, do not strike it off. Striking off an insolvent company isn't a way out — creditors can object and have it restored, directors can face personal liability and disqualification, and you may be acting improperly by trying to dissolve a company that owes money. The correct route for an insolvent company is to take advice and, usually, a Creditors' Voluntary Liquidation handled by a licensed insolvency practitioner. This is firmly a "get proper advice" situation, not a DIY one.
There's also a middle option if you're not sure you want to close for good: making the company dormant. A dormant company hasn't traded but stays on the register, so you keep the name and can pick the business back up later. It isn't free of admin, though — you still file the annual confirmation statement and dormant accounts with Companies House, so weigh the ongoing obligations against simply closing and reincorporating later. If you've been deciding between staying limited and going it alone, our comparison of sole trader versus limited company may help frame whether to wind down at all, and if you'll keep trading for now, what expenses a limited company can claim covers what stays legitimately deductible.
Whichever route you take, the order matters: clear debts and any director's loan, draw out the funds before dissolution, file the final accounts and tax return, then close. Miss a step and you either lose money to the Crown or hand HMRC more than you needed to. If you'd rather not work out the sequence — or the £25,000 line — alone, an accountant can run it and tell you which route saves the most. We'll match you with one; if you're weighing whether you even need that support, our guide on whether a limited company needs an accountant is a useful starting point, and there's more on how the introductions work on our accountancy page.
How much does it cost to close a limited company?
Striking off (form DS01) costs £18 to file with Companies House for the 2026/27 year. That's the only mandatory fee for a simple strike-off, though you may pay for an accountant to prepare the final accounts and tax return. A Members' Voluntary Liquidation costs more because it's run by a licensed insolvency practitioner, so it's used where the tax saved on a larger distribution justifies the professional fee.
Can I just stop trading and close my company?
Not quite. You stop trading first, but you also have to settle debts, clear any overdrawn director's loan, prepare final accounts and a final Company Tax Return, pay any tax due, and take the remaining money and assets out before you apply to strike the company off. Anything left in the company when it's dissolved passes to the Crown.
How long does it take to strike off a company?
Once you've wound the company down and filed the DS01, Companies House publishes a notice in the Gazette and waits at least two months for objections before striking the company off. So from application to dissolution it's typically around two to three months, longer if there are objections or loose ends to tidy up first.
Do I pay tax when I close my limited company?
Often, yes. Money you take out of a solvent company on a strike-off is treated as capital (potentially CGT and Business Asset Disposal Relief at 18%) only if the total is £25,000 or less; above that it's all taxed as a dividend at 2026/27 rates. A Members' Voluntary Liquidation can keep capital treatment for larger amounts — which is why the route you choose drives the tax bill.
What's the difference between strike-off and liquidation?
Strike-off is the simple, low-cost way to dissolve a solvent company that has stopped trading and has little left to distribute. Liquidation is a formal process run by a licensed insolvency practitioner — a Members' Voluntary Liquidation for solvent companies with more to return (for capital treatment), or a Creditors' Voluntary Liquidation for insolvent companies that can't pay their debts.
Most small, solvent companies close by applying to strike it off (form DS01, £18) at Companies House — but only if it hasn't traded or sold stock, or changed its name, in the last three months and isn't being threatened with liquidation. Before you file, you have to stop trading, settle any debts, prepare final accounts and a final Company Tax Return for HMRC, and pay any tax owed. The tax trap that catches directors out is the money left in the company: if there's more than £25,000 to take out, a strike-off makes the whole lot a taxable dividend, whereas a Members' Voluntary Liquidation (MVL) lets larger solvent closures be treated as capital instead — often far more tax-efficient, with Business Asset Disposal Relief at 18%. Get the route wrong and an avoidable tax bill follows. Here's how each option works, what it costs, and how to pick.
Figures are for the 2026/27 tax year and sourced to gov.uk and HMRC; they change at each Budget. General guidance, not personal advice — and we connect you with a partner accountant rather than file anything ourselves.
How do you strike off a limited company?
Striking off (also called dissolving) is the cheapest, simplest way to close a solvent company that has stopped trading. You apply on form DS01, which costs £18 to file with Companies House, and you can only use this route if, in the last three months, the company has not traded or sold off stock, not changed its name, and is not threatened with liquidation or bound by a creditor agreement such as a CVA (gov.uk).
Before you apply, the company needs to be properly wound down: stop trading, collect what you're owed, settle outstanding bills, close the payroll and deregister for VAT if relevant, then prepare final accounts and a final Company Tax Return so HMRC can be paid any corporation tax due. You must also tell interested parties — shareholders, employees, creditors and anyone else who could object. Companies House publishes a notice in the Gazette, and after a two-month wait with no objection the company is struck off the register and ceases to exist.
One detail people miss: take the money and assets out before the company is dissolved. Anything left in a struck-off company — cash in the bank, property, even a small balance — passes to the Crown as bona vacantia. Empty the accounts and distribute assets to shareholders first, in the right order, or you simply lose them.
The filing cost is small — £18 for the DS01. The number that actually moves the bill is how the money you draw out is taxed, and that turns on the £25,000 rule.
Under CTA 2010 s1030A, distributions to shareholders on a strike-off are treated as capital — potentially qualifying for Capital Gains Tax treatment and Business Asset Disposal Relief — only if the total distributed is £25,000 or less. Go a pound over £25,000 and the whole amount is taxed as an income distribution (a dividend), at 2026/27 dividend rates of 10.75%, 35.75% or 39.35% depending on your band (gov.uk). That's a cliff edge, not a sliding scale, which is exactly why the route you choose matters.
Where the distribution is taxed as capital, Business Asset Disposal Relief (BADR) can apply to qualifying gains, charging 18% on disposals made on or after 6 April 2026 (the rate rose from 10%, via 14% in 2025/26), up to a £1 million lifetime limit (gov.uk). For a solvent company with a meaningful balance to return, capital treatment at 18% can be considerably cheaper than dividend rates — but only if you close by a route that delivers it.
There's one more trap before you close anything: an overdrawn director's loan account. If you've drawn more from the company than you've put in or been paid, that loan has to be cleared first — you can't just walk away from money you owe the company, and an unsettled balance has tax consequences. Sort it out before you start the closure, and read our explainer on how directors' loans work if you're not sure where you stand.
Strike-off vs MVL vs liquidation — which is right?
The right closure depends on two things: whether the company is solvent (can pay its debts), and how much is left to take out. A clean small balance points to strike-off; a larger solvent balance usually points to an MVL for capital treatment; an insolvent company must not strike off at all.
Route
When it fits
Rough tax treatment
Strike-off (DS01)
Small, solvent, stopped trading; £25,000 or less to distribute
Distributions can be capital (CGT/BADR) if total ≤ £25,000
Members' Voluntary Liquidation (MVL)
Solvent, but more than £25,000 to distribute
Distributions treated as capital — BADR at 18% may apply
Creditors' Voluntary Liquidation (CVL)
Insolvent — can't pay what it owes
Handled by a licensed insolvency practitioner; not a tax-planning choice
An MVL is a formal process run by a licensed insolvency practitioner, so it carries professional fees — worth it when the tax saved on a large capital distribution outweighs the cost, but not for a company with very little left in it. The maths is specific to your figures, which is why this is the point to get a second opinion before you commit. The closures we most often help match an accountant for are the ones with more than £25,000 still in the company: get the route wrong here and an avoidable dividend-tax bill follows.
What if the company has debts or you just want to pause it?
If the company can't pay its debts, do not strike it off. Striking off an insolvent company isn't a way out — creditors can object and have it restored, directors can face personal liability and disqualification, and you may be acting improperly by trying to dissolve a company that owes money. The correct route for an insolvent company is to take advice and, usually, a Creditors' Voluntary Liquidation handled by a licensed insolvency practitioner. This is firmly a "get proper advice" situation, not a DIY one.
There's also a middle option if you're not sure you want to close for good: making the company dormant. A dormant company hasn't traded but stays on the register, so you keep the name and can pick the business back up later. It isn't free of admin, though — you still file the annual confirmation statement and dormant accounts with Companies House, so weigh the ongoing obligations against simply closing and reincorporating later. If you've been deciding between staying limited and going it alone, our comparison of sole trader versus limited company may help frame whether to wind down at all, and if you'll keep trading for now, what expenses a limited company can claim covers what stays legitimately deductible.
Whichever route you take, the order matters: clear debts and any director's loan, draw out the funds before dissolution, file the final accounts and tax return, then close. Miss a step and you either lose money to the Crown or hand HMRC more than you needed to. If you'd rather not work out the sequence — or the £25,000 line — alone, an accountant can run it and tell you which route saves the most. We'll match you with one; if you're weighing whether you even need that support, our guide on whether a limited company needs an accountant is a useful starting point, and there's more on how the introductions work on our accountancy page.
How much does it cost to close a limited company?
Striking off (form DS01) costs £18 to file with Companies House for the 2026/27 year. That's the only mandatory fee for a simple strike-off, though you may pay for an accountant to prepare the final accounts and tax return. A Members' Voluntary Liquidation costs more because it's run by a licensed insolvency practitioner, so it's used where the tax saved on a larger distribution justifies the professional fee.
Can I just stop trading and close my company?
Not quite. You stop trading first, but you also have to settle debts, clear any overdrawn director's loan, prepare final accounts and a final Company Tax Return, pay any tax due, and take the remaining money and assets out before you apply to strike the company off. Anything left in the company when it's dissolved passes to the Crown.
How long does it take to strike off a company?
Once you've wound the company down and filed the DS01, Companies House publishes a notice in the Gazette and waits at least two months for objections before striking the company off. So from application to dissolution it's typically around two to three months, longer if there are objections or loose ends to tidy up first.
Do I pay tax when I close my limited company?
Often, yes. Money you take out of a solvent company on a strike-off is treated as capital (potentially CGT and Business Asset Disposal Relief at 18%) only if the total is £25,000 or less; above that it's all taxed as a dividend at 2026/27 rates. A Members' Voluntary Liquidation can keep capital treatment for larger amounts — which is why the route you choose drives the tax bill.
What's the difference between strike-off and liquidation?
Strike-off is the simple, low-cost way to dissolve a solvent company that has stopped trading and has little left to distribute. Liquidation is a formal process run by a licensed insolvency practitioner — a Members' Voluntary Liquidation for solvent companies with more to return (for capital treatment), or a Creditors' Voluntary Liquidation for insolvent companies that can't pay their debts.
