How to close a limited company
A solvent company with little left in it is normally closed by striking it off with form DS01 — possible only if it has not traded or sold stock in the last 3 months, has not changed its name in that time, is not threatened with liquidation and has no creditor agreements. Where there are meaningful reserves, a members' voluntary liquidation can allow the distribution to be treated as capital rather than income.
Most companies are closed badly — by stopping, rather than by closing. The difference shows up in the tax on whatever was left inside, and in the penalties for the filings that were never done.
Choosing the route
Strike off is the simple one: an application to remove the company from the register. It suits a company that has stopped, has settled what it owes, and has little or nothing left in it. The conditions above are strict about recent activity — trading or selling stock within three months of applying blocks it.
A members' voluntary liquidation is used where meaningful reserves remain. It involves an appointed liquidator and costs more, but the distribution can be treated as capital rather than income, which for larger balances is usually the whole point.
An insolvent liquidation applies where the company cannot pay its debts. At that point directors' duties shift towards creditors, and the right move is advice immediately rather than a decision about closure made alone.
Getting the money out first
Anything left in the company when it is dissolved passes to the Crown. Not held, not returned on request — gone.
How it comes out decides the tax:
- As dividends, taxed at 10.75% to 39.35% — see the dividend calculator.
- As a capital distribution, which for larger amounts is generally taxed more favourably — but the route and the amount both matter, and anti-avoidance rules exist for people who close one company and start another doing the same thing.
- As salary or a bonus, deductible for the company but carrying income tax and National Insurance.
This is the decision worth taking advice on. It is also the one that cannot be revisited: once distributed, the treatment is what it is.
Closing down? Get the order right
The sequence — final accounts, final return, distributing what is left, then the application — decides both the tax and whether it goes smoothly. Tell us what the company holds and we will map it out before anything is filed.
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Free assessment first. If there is work to do, you get a fixed quote in writing before anything starts.
What still has to be filed
Closing does not cancel the obligations that arose while the company traded:
- Final accounts and a final CT600, with the corporation tax due 9 months and 1 day after the end of the accounting period as usual.
- Any outstanding confirmation statement.
- Closing the payroll scheme and deregistering for VAT, where they exist.
- Settling anything owed to HMRC — including a director's loan, which does not simply vanish when the company does.
Why "just stop" is the expensive version
A company left to be struck off for non-filing takes the same journey to dissolution, but with penalties along the way, possible prosecution of the directors for the missed filings, and any remaining assets forfeited. It also leaves the door open for a creditor to apply to restore the company later, which reopens everything.
If the company was never really needed, that is a common and fixable position — seesole trader or limited company for how the decision looks from the other end.
Questions people ask
What are the ways to close a company?
Striking it off with form DS01, which suits a solvent company with little or nothing left in it; a members' voluntary liquidation, used where there are meaningful reserves to distribute; or, where the company cannot pay its debts, an insolvent liquidation, which is a different process with different duties.
When can I apply to strike off?
The company must not have traded or sold off stock in the last 3 months, must not have changed its name in the last 3 months, must not be threatened with liquidation, and must have no agreements with creditors such as a CVA.
Can I just stop filing and let it be struck off?
It happens, and it is a bad way to do it. Assets left in the company pass to the Crown, penalties and prosecution for the missed filings remain possible, and creditors can apply to restore the company later. Closing deliberately costs less than closing by neglect.
What happens to money left in the company?
It has to come out before dissolution or it is lost to the Crown. How it comes out determines the tax: distributions can be treated as income or, in the right circumstances and through the right route, as capital — and the difference is large enough to decide which closure route to use.
Do I still have to file a final CT600?
Yes. There is a final accounting period, a final set of accounts and a final return, and the corporation tax on it is due as normal. Closing the company does not close the obligations that arose while it traded.
How long does it take?
A strike-off runs over a few months from application, with a notice period during which objections can be made. A liquidation takes longer and involves an appointed insolvency practitioner. Neither is a same-month exit, which matters if the decision is being driven by a deadline.
Figures are for the tax year shown and change every April. They are general information, not advice — we check the current position for your circumstances before anything is filed.
Reviewed 19 October 2026.
Part of our work on company filings and deadlines — if you want someone to take it off your hands, start with our confirmation statement filing page.