How to close a limited company: strike off or liquidation

1. Choose your route: strike off vs liquidation

Start with solvency. If the company can pay everything it owes, GOV.UK lists two options: apply to strike it off the register, or start a members' voluntary liquidation. If it cannot pay its bills, the options GOV.UK lists are administration, a creditors' voluntary liquidation or strike off, and creditors must be put first. Creditors can object to a strike off application.

You usually need the agreement of the company's directors and shareholders to close it. If the company has no directors, one must be appointed first.

We do not handle insolvent closures. If the company cannot pay its bills, speak to an authorised insolvency practitioner before you take any step, including moving money out of the company.

Source: Closing a limited company

2. If the company cannot pay its debts

If a limited company cannot pay its debts, it is insolvent, and GOV.UK says the interests of its creditors legally come before those of the directors or shareholders. The usual formal routes are administration or a creditors' voluntary liquidation, both run by an authorised insolvency practitioner. Get their advice before moving any money out of the company.

• Administration: you appoint an administrator, who must be an insolvency practitioner. While the company is in administration, it is protected from legal action by creditors and nobody can apply to wind it up.
• Creditors' voluntary liquidation (CVL): 75% of shareholders, by value of shares, pass a winding-up resolution and appoint an authorised insolvency practitioner as liquidator. The resolution goes to Companies House within 15 days and is advertised in The Gazette within 14 days.
• Strike off: GOV.UK lists it as an option, but creditors can object, a company threatened with liquidation or with an agreement with creditors such as a Company Voluntary Arrangement (CVA) cannot apply, and a dishonest application is an offence.

Source: Closing a limited company

3. Members' voluntary liquidation: how it works

A members' voluntary liquidation (MVL) is a formal way to close a solvent company. An authorised insolvency practitioner must act as liquidator, and GOV.UK says striking off is usually the cheapest way to close a company.

1. A majority of the directors sign a declaration of solvency in front of a solicitor or notary public, saying the company can pay its debts within no more than 12 months.
2. No more than 5 weeks later, the shareholders pass a resolution for voluntary winding up and appoint the liquidator.
3. The resolution is advertised in The Gazette within 14 days.
4. The signed declaration goes to Companies House within 15 days of the resolution.

Source: Members' voluntary liquidation

4. Business Asset Disposal Relief rates and the 3-year rule

Business Asset Disposal Relief can reduce the Capital Gains Tax due when you dispose of qualifying company shares. GOV.UK gives the rate as 14% on gains on qualifying assets disposed of between 6 April 2025 and 5 April 2026, and 18% on disposals from 6 April 2026. You can claim a total of £1 million in the relief over your lifetime.

For company shares, both of these must apply for at least 2 years up to the date you sell: you are an employee or office holder of the company, and its main activities are in trading. Unless they are EMI shares, you also need at least 5% of the shares and voting rights, and at least a 5% entitlement to profits and assets or to sale proceeds.

If the company stops being a trading company, GOV.UK says you can still qualify for relief if you sell your shares within 3 years. The £25,000 rule for money taken out before a strike off is in the checklist below. Ask a tax adviser how these rules apply to your closure before you choose a route.

Source: Business Asset Disposal Relief: eligibility

5. Check the company can be struck off

Voluntary strike off is only available if, in the last 3 months, the company has not traded or sold off any stock and has not changed its name. It must not be threatened with liquidation and must have no agreements with creditors, such as a Company Voluntary Arrangement (CVA). If it does not meet these conditions, GOV.UK says you will need to use voluntary liquidation instead.

If you still need to trade, sell stock or rename the company, wait until 3 months have passed after the last of these before you apply.

Source: Strike off your limited company from the Companies Register

6. Pre-closure checklist: tax, staff, assets and bank

Finish these tasks before you apply. Once the company is struck off, it no longer legally exists, and anything left in its name passes to the Crown.

• Staff: follow the redundancy rules and pay final wages. Give each employee a P45. Then close the PAYE scheme by sending a final Full Payment Submission (FPS) or Employer Payment Summary (EPS) with the 'Final submission because scheme ceased' box ticked and the date the scheme ceased. Pay any tax and National Insurance still owed to HMRC.
• Corporation Tax: prepare final accounts and a final Company Tax Return (CT600). File them, stating that these are the final trading accounts, and pay all Corporation Tax and any other tax due.
• VAT: if the company is VAT registered, cancel the registration once it stops being eligible, for example because it has stopped trading. HMRC says you must cancel within 30 days or you might be charged a penalty. You then send a final VAT Return for the period up to and including the cancellation date.
• Assets: pay the company's debts, then share any remaining assets among the shareholders. GOV.UK says that if the amount you take out is worth more than £25,000, it will be treated as income and Income Tax will be due on it. Below that, Capital Gains Tax may apply. Get tax advice if the sums are significant.
• Bank account and other assets: once the money has been distributed, close the company bank account. GOV.UK also suggests transferring things like domain names before you apply.

Source: Strike off: close down your company first

7. Apply to strike off with form DS01

The application is form DS01. It must be signed by a majority of the company's directors. The Companies House fee is £13 online or £18 on paper, as shown in our guide to Companies House fees. You cannot pay the paper fee with a cheque from the company's own bank account.

Within 7 days of applying, you must send a copy of the application to the members (usually the shareholders), existing and likely creditors, employees, managers or trustees of any employee pension fund, and any directors who did not sign. Anyone who joins one of those groups before the application is dealt with must also get a copy within 7 days. Not doing this is an offence.

It is also an offence to make a dishonest application. You can face a fine and possible prosecution.

Source: Striking off or dissolving a limited company

8. Timeline: what happens after you apply

Companies House publishes a notice of your application in The Gazette. If nobody objects, the company is struck off once the 2 months mentioned in the notice have passed. A second notice is then published, and the company no longer legally exists.

While you wait, the company must stay eligible. If it starts trading again or becomes insolvent, you must withdraw the application. Only one director needs to sign the withdrawal, online or on form DS02.

Keep business documents, such as bank statements, invoices and receipts, for 7 years after the company is struck off.

Source: Apply to strike off

9. What happens to money left in the bank: bona vacantia

Anything the company still owns when it is struck off passes to the Crown. This is called bona vacantia. It includes money in the company bank account and any payments that arrive later, such as a tax refund.

Getting it back is not simple. A company that was struck off on its own application generally needs a court order to be restored, and the application must usually be made within 6 years of dissolution. Funds that passed to the Crown are dealt with by the Government Legal Department's Bona Vacantia Division. Read how to restore a dissolved company for the routes. The safest approach is to distribute everything and close the account before you apply.

Source: Company restoration guide

10. Common mistakes when closing a company

Check this list before you send the DS01.

• Applying while a final tax refund, customer payment or deposit is still due. It will go to the Crown.
• Forgetting to cancel VAT or close the PAYE scheme. These are separate HMRC tasks from the strike off application.
• Not sending copies of the DS01 to creditors, staff and shareholders within 7 days.
• Using strike off to walk away from debts. Creditors can object, and a dishonest application is an offence. If the company cannot pay its bills, get insolvency advice first.
• Carrying on trading after applying. The application must be withdrawn if the company stops being eligible.
• Leaving filings overdue and waiting for Companies House to remove the company. That is a compulsory strike-off, not a closure plan: see what a First Gazette notice for compulsory strike-off means.

11. How SimpleFilings can help

We can help with some of the solvent closure steps: preparing the strike off application for the required directors to approve, checking what is needed to close your PAYE scheme, and preparing a request to cancel your VAT registration. Each service has a £4.99 SimpleFilings service fee. The total price includes applicable government fees, such as the £13 Companies House online strike-off fee.

We do not prepare payroll, final accounts or Corporation Tax returns, and we do not send the 7-day copies to shareholders, creditors and staff for you. We cannot advise on insolvency, liquidation or tax on distributions. Please speak to an insolvency practitioner, accountant or tax adviser for those.