How to Close a Limited Company UK — Striking Off, MVL & Dissolution
How to close a limited company in the UK, including striking off, Members' Voluntary Liquidation, informal winding down, tax implications, and the steps involved.
·4 min read
Whether you’re retiring, changing structure, or simply finished trading — here’s how to close your limited company properly.
Options for Closing a Company
Method
Best for
Cost
Time
Voluntary striking off (DS01)
No debts, assets under £25,000, not traded for 3 months
£10
3–6 months
Members’ Voluntary Liquidation (MVL)
Solvent company with assets over £25,000
£2,000–£6,000+
3–12 months
Informal wind-down
Gradually cease trading, pay debts, extract funds as dividends
Low
Varies
Creditors’ Voluntary Liquidation (CVL)
Company can’t pay its debts
£3,000–£7,000
6–18 months
Make company dormant
Want to keep the company but stop trading
Free (just file dormant accounts)
Ongoing
Voluntary Striking Off (Dissolution)
When to Use It
Suitable
NOT suitable
Company has no debts
Company has outstanding debts
Company has not traded in the last 3 months
Company is still trading
Assets are under £25,000
Assets over £25,000 (use MVL instead)
No pending legal action
Company is subject to legal proceedings
Not currently being wound up
Already in formal insolvency process
Steps
Step
Action
1
Stop trading — cease all business activities
2
Settle all debts — pay creditors, HMRC, employees
3
File any outstanding accounts and tax returns
4
Distribute remaining assets to shareholders (up to £25,000 = capital distribution)
5
Close the business bank account
6
Submit DS01 form to Companies House (£10 fee)
7
Notify within 7 days all interested parties: HMRC, employees, shareholders, creditors, pension providers
8
Companies House publishes notice in The Gazette
9
2-month waiting period for objections
10
If no objections, company is struck off and dissolved
Tax on Final Distribution (Striking Off)
Distribution amount
Tax treatment
Up to £25,000
Treated as capital — taxed at CGT rates (10% or 20%)
Over £25,000
Excess treated as dividend income — taxed at up to 39.35%
With Business Asset Disposal Relief
10% CGT rate on qualifying gains (lifetime limit £1 million)
Members’ Voluntary Liquidation (MVL)
When to Use It
Situation
Why MVL
Company has more than £25,000 in assets
Distributions taxed at 10% CGT (with BADR) rather than dividend rates
Significant retained profits
£50,000+ of retained profits makes the tax saving meaningful
Director retiring or closing down
Clean, formal process to wind up affairs
Multiple shareholders
Professional distribution ensures fairness
How It Works
Step
Action
1
Directors make a Declaration of Solvency (company can pay all debts within 12 months)
2
Shareholders pass a special resolution to wind up the company
3
Appoint a licensed insolvency practitioner as liquidator
4
Liquidator takes control of the company
5
All debts are paid
6
Remaining assets distributed to shareholders as capital
7
Liquidator applies to Companies House for dissolution
8
Company is struck off
MVL Costs
Item
Typical cost
Insolvency practitioner fee
£2,000–£6,000+ (depends on complexity)
Final accounts preparation
£500–£1,500 (your accountant)
Companies House filing
Included in IP costs
Statutory advertising
Included in IP costs
Tax Savings — MVL vs Striking Off vs Dividends
Retained profits
Dividend tax (higher rate)
Capital gains (with BADR)
Tax saving with MVL
£25,000
~£8,400
~£2,500
~£5,900
£50,000
~£17,000
~£5,000
~£12,000
£100,000
~£34,000
~£10,000
~£24,000
£200,000
~£68,000
~£20,000
~£48,000
Illustrative — assumes higher-rate taxpayer, BADR at 10%, annual CGT exemption used elsewhere. Actual savings depend on individual circumstances.
Business Asset Disposal Relief (BADR)
Feature
Detail
What it does
Reduces CGT to 10% on qualifying disposals (up to £1 million lifetime)
Qualifying conditions
You must: be an officer or employee, hold at least 5% of shares and 5% of voting rights, have held them for at least 2 years before distribution
Lifetime limit
£1 million of qualifying gains
How to claim
Via your Self Assessment tax return for the year of distribution
Checklist Before Closing
Item
Detail
File all outstanding accounts
Annual accounts up to date with Companies House
File all corporation tax returns
All CT600s filed with HMRC
Pay all corporation tax
Including tax on final year profits
File final VAT return
And deregister for VAT
Settle all debts
Creditors, loans, HMRC
Final payroll
Pay final salaries, file final FPS and EPS
P45s issued
To all employees (including yourself)
PAYE scheme closed
Notify HMRC
Cancel business insurance
Or transfer
Close business bank account
After all transactions are settled
Notify HMRC
Corporate tax, VAT, PAYE
Notify Companies House
DS01 or MVL
Keep records
6 years after the company is dissolved
Common Mistakes
Mistake
Consequence
Distributing more than £25,000 without an MVL
Excess taxed as dividends, not capital gains
Not filing final accounts/tax returns
HMRC penalties, Companies House penalties, objection to striking off
Not paying outstanding HMRC debts
HMRC can object to striking off
Not informing all interested parties within 7 days
Fine of up to £5,000 per offence
Making false Declaration of Solvency
Criminal offence — if debts can’t actually be paid