How to close a limited company

For a solvent company the usual route is voluntary strike off: stop trading, tell HMRC, file your final accounts and Company Tax Return, pay any outstanding Corporation Tax, VAT and PAYE, distribute any remaining funds to shareholders and close the bank account, then file form DS01 with Companies House. After about two months with no objections, the company is struck off the register and dissolved. If the company cannot pay its debts, you cannot simply strike it off and must use a liquidation process instead.

If the company is solvent, has stopped trading and has dealt with its tax and assets, you can apply to strike it off yourself with form DS01, it is a fairly simple form. The part that catches people out is everything before the form: the final accounts and tax return, closing VAT and PAYE, and getting money out tax-efficiently. Done in the wrong order you can pay more tax than you needed to, which is why most people have an accountant handle the closure.

A voluntary strike off is cheap in itself, the Companies House fee for a DS01 is modest (around £33 to file online). The larger costs are usually preparing the final accounts and tax return and, for a company with significant reserves, a Members’ Voluntary Liquidation, which involves a licensed insolvency practitioner but can save tax overall. An insolvent closure through a CVL costs more because of the practitioner’s role. We will tell you the most cost-effective route for your situation.

Yes. Closing the company at Companies House does not deal with HMRC. You need to tell HMRC you have stopped trading, file your final Company Tax Return and pay any Corporation Tax, close down PAYE and deregister for VAT, and settle anything outstanding. Striking off without sorting your tax can lead to the application being rejected (HMRC can object) or to problems later. We make sure the tax side is properly closed at the same time.

There is no legal requirement, but it is where an accountant usually pays for itself. The order you do things in affects how much tax you pay, especially getting reserves out as capital rather than income, and the final accounts, tax return and deregistrations all need to be right. Getting it wrong can mean overpaid tax or a closure that stalls. We handle the whole process so it is clean, compliant and as tax-efficient as the rules allow.

It depends mainly on how much is left in the company. With modest reserves, a voluntary strike off lets you take the remaining funds, and amounts up to £25,000 can often be treated as capital rather than income, which is usually taxed more favourably. With larger reserves, a Members’ Voluntary Liquidation can let the whole distribution be treated as capital, and Business Asset Disposal Relief may reduce the rate further. The right choice can make a real difference, so it is worth modelling before you act.