There are three main ways to close a limited company in the UK: voluntary strike-off, a Members’ Voluntary Liquidation (MVL), or a Creditors’ Voluntary Liquidation (CVL). Which one is right depends on two questions. Can the company pay all its debts? And how much money is left in it?
Pick the wrong route and the cost can be real. Leftover cash can be taxed at dividend rates instead of capital gains rates. Directors can stay personally exposed to debts they thought were gone. And anything left in the company bank account at dissolution passes to the Crown. This guide explains each route, who it suits, and the steps to take before you file anything.
Strike-off vs liquidation at a glance
- Voluntary strike-off (form DS01) — for solvent companies with little or no money left. Costs £13 online. No insolvency practitioner needed.
- Members’ Voluntary Liquidation (MVL) — for solvent companies with significant cash or assets to distribute, usually over £25,000. Run by a licensed insolvency practitioner.
- Creditors’ Voluntary Liquidation (CVL) — for insolvent companies that can’t pay their debts. Also run by an insolvency practitioner.
Route 1: Voluntary strike-off
Strike-off is the simplest and cheapest way to close a company that has stopped trading and has no debts. The directors apply to Companies House on form DS01. Since 1 February 2026 the fee is £13 online or £18 on paper.
You can only apply if, in the last three months, the company hasn’t traded, changed its name, or sold property or rights it held while trading. It also can’t be in, or about to enter, an insolvency procedure.
Once Companies House accepts the application, it publishes a notice in The Gazette. Creditors, HMRC and anyone else have two months to object. If nobody does, the company is dissolved and a second notice is published.
Our step-by-step guide to applying for strike-off with form DS01 covers the eligibility rules and who you must notify.
The £25,000 rule for leftover cash
Before striking off, most directors take the remaining cash out of the company. If the total distributed in the strike-off is £25,000 or less, it can be treated as capital. That means Capital Gains Tax rather than Income Tax on dividends, which is usually cheaper.
Above £25,000, the whole amount — not just the excess — is taxed as a dividend. At current dividend rates that can be a significant extra cost. This is the main reason companies with more money in the bank choose an MVL instead.
Route 2: Members’ Voluntary Liquidation (MVL)
An MVL is a formal liquidation for a solvent company. The directors swear a declaration of solvency confirming the company can pay all its debts within 12 months. The shareholders then appoint a licensed insolvency practitioner as liquidator.
The liquidator collects the assets, pays creditors and distributes what’s left to shareholders as capital, whatever the amount. Shareholders may qualify for Business Asset Disposal Relief, which reduces the Capital Gains Tax rate on qualifying gains.
An MVL costs more than a strike-off, mainly because of the liquidator’s fee. It usually makes sense when the cash to distribute is well above £25,000 and the tax saving outweighs the fees. It also gives a cleaner finish, because the liquidator formally deals with creditors.
The anti-phoenix rule
If you close a company and then carry on a similar trade within two years, HMRC can treat a capital distribution as income. Take advice before closing one company and starting another doing the same work.
Route 3: Creditors’ Voluntary Liquidation (CVL)
If the company can’t pay its debts, it is insolvent and strike-off is not an option. Using strike-off to walk away from debts can lead to the company being restored and to action against the directors.
A CVL is started by the directors, who appoint an insolvency practitioner to wind the company up and deal with creditors. If you’re in this position, speak to a licensed insolvency practitioner early. Directors have a duty to act in creditors’ interests once a company is insolvent.
Before you close: the checklist
- Stop trading and collect any money owed to the company.
- Pay all debts, including suppliers, loans and HMRC.
- Deal with employees, including final payroll and redundancy where it applies.
- File final accounts and a final Corporation Tax return covering the period up to when the company stopped trading.
- Close PAYE and deregister for VAT if the company is registered.
- Clear the director’s loan account so nothing is owed either way.
- Distribute the remaining cash and close the business bank account.
- Transfer or sell any assets. Anything left at dissolution belongs to the Crown.
HMRC often objects to strike-off if returns or tax are outstanding, so getting the final accounts and CT600 filed first keeps the timetable on track.
What about a dormant company you want to keep?
If you might use the company again, you don’t have to close it. You can keep it dormant instead. It still has to file accounts and a confirmation statement each year, but there’s no Corporation Tax to pay. See our guide to what counts as a dormant company.
Get help closing your company
SmartFiling’s ICAEW chartered accountants prepare the final accounts and Corporation Tax return, close PAYE and VAT, and handle the strike-off application for solvent companies. Where an MVL is the better choice, we’ll explain why and work alongside your insolvency practitioner. Get a free quote and we’ll reply within one working day.
Frequently asked questions
How long does it take to close a limited company?
A strike-off usually takes around three months from application, provided nobody objects. An MVL typically takes several months longer.
Can I close a company with a bounce back loan?
Not by strike-off while the loan is outstanding. The lender is a creditor and can object. Repay it, or take advice from an insolvency practitioner.
Can a dissolved company be restored?
Yes. A company can be restored to the register, either administratively or by court order, for example to recover assets or deal with a claim.
