If you want to close a solvent limited company, the most common route is a voluntary strike-off using form DS01, filed with Companies House for £13 online (or £18 by post) from 1 February 2026. A majority of directors must sign it, and the company is usually dissolved about two to three months after the notice appears in The Gazette. Before you apply you must settle every tax bill, file outstanding accounts, pay creditors and distribute any money left in the company.
DS01 is the right route if your company is dormant, never traded, or has stopped trading and can pay what it owes. If it cannot clear its debts, strike-off is not available and you would need a members' or creditors' voluntary liquidation instead. This guide covers who can use DS01, the step-by-step process, the 2026/27 tax you must settle first, and how to take your final reserves as capital rather than income.
What is a DS01 strike-off?
A DS01 strike-off, also called a voluntary dissolution, removes your company from the Companies House register so it legally ceases to exist. Once struck off, the company cannot trade, hold assets or operate bank accounts, and any assets left behind pass to the Crown under bona vacantia. It is the cheapest and simplest way to close a solvent company with no significant debts.
Larger or insolvent companies cannot use DS01 and must instead use a formal liquidation handled by a licensed insolvency practitioner. The route you choose changes both the cost and the tax you pay, so it is worth comparing them before you file.
DS01 strike-off or liquidation: which route should you use?
A DS01 strike-off suits a solvent company with modest reserves (up to about £25,000 to distribute) and no debts it cannot pay, and costs just £13. A members' voluntary liquidation (MVL) suits a solvent company with larger reserves, because it keeps the whole distribution in the capital gains regime. A creditors' voluntary liquidation (CVL) is for insolvent companies that cannot pay their debts.
| Route | Use when | Typical cost | Tax on final funds |
|---|---|---|---|
| DS01 strike-off | Solvent, low reserves (up to ~£25,000), no debts it cannot pay | £13 online (£18 paper) | Capital (CGT) up to £25,000; above that the whole sum is taxed as a dividend |
| Members' voluntary liquidation (MVL) | Solvent, larger reserves (roughly £25,000+) worth extracting as capital | Insolvency practitioner fee, often £1,500 to £4,000+ | Whole distribution taxed as capital (CGT); BADR may apply |
| Creditors' voluntary liquidation (CVL) | Insolvent, cannot pay debts as they fall due | Insolvency practitioner fee, usually higher | Usually no distribution; assets go to creditors |
For most micro-companies with modest reserves, DS01 is the right call. The tipping point is the £25,000 capital-distribution limit: cross it on a strike-off and the whole payout is taxed as a dividend, at which point a paid MVL can work out cheaper overall.
Strike-off eligibility: can your company apply?
Your company can apply for a DS01 strike-off only if, in the last three months, it has not traded, sold stock, changed its name, or disposed of property for value (beyond winding-up activity), and it is not subject to insolvency or winding-up action. Meet those conditions and a majority of directors can sign and file the form.
In the last three months your company must not have:
- Traded or sold any stock (other than winding-up activity)
- Changed its name
- Disposed of property or rights for value (e.g. sold premises it traded from)
- Engaged in any activity except that needed to close down
You also cannot apply if the company is the subject of insolvency proceedings, a creditors' arrangement, or a court action to wind it up.
How to close a limited company: step by step
To close a limited company, settle its taxes and creditors, distribute any remaining funds to shareholders, close the bank accounts, then file form DS01 with Companies House and notify all interested parties within seven days. If no one objects, the company is struck off about two to three months later. GOV.UK sets out the official steps to close a limited company.
| Step | Action | Who/where |
|---|---|---|
| 1 | Inform staff, follow redundancy rules and run final payroll (P45s, final FPS, close PAYE scheme) | You / HMRC |
| 2 | Settle Corporation Tax, VAT and PAYE; file the final accounts and Company Tax Return | HMRC |
| 3 | Deregister for VAT (form VAT7) if registered | HMRC |
| 4 | Distribute remaining cash and assets to shareholders | Directors |
| 5 | Close company bank accounts | Bank |
| 6 | File form DS01, signed by a majority of directors | Companies House |
| 7 | Notify interested parties (creditors, members, employees, pension trustees) within 7 days of filing | You |
You must keep business records for at least seven years after the company is dissolved, and longer for some payroll and pension documents.
How much does a DS01 cost and how long does it take?
A DS01 costs £13 to file online or £18 by post (cheque or postal order, not from the company's own account), the Companies House fees in force from 1 February 2026. The company is then usually dissolved two to three months after the first notice appears in The Gazette, provided no one objects.
Online filing via the Companies House service is faster, and it is the route we recommend. Companies House publishes a first notice in The Gazette; if no one objects, a second notice follows and the company is dissolved. The full official process is set out in the GOV.UK guidance on how to apply for strike-off.
What are the key rates and limits for closing a company in 2026/27?
These are the figures that decide how much a closure costs you, all current for the 2026/27 tax year and taken from GOV.UK and HMRC.
| Item | 2026/27 figure | Notes |
|---|---|---|
| DS01 fee (online) | £13 | £18 by post, from 1 February 2026 |
| Dissolution timeline | 2 to 3 months | From the first Gazette notice, if unopposed |
| Capital-distribution limit (s1030A) | £25,000 | Company-wide, not per shareholder; above this the whole sum is taxed as a dividend |
| Business Asset Disposal Relief | 18% | On up to £1m lifetime gains, from 6 April 2026 (was 14% in 2025/26) |
| CGT on shares (no BADR) | 18% / 24% | Basic / higher rate; annual exempt amount £3,000 |
| Dividend allowance | £500 | First £500 of dividends tax-free |
| Dividend tax rates | 10.75% / 35.75% / 39.35% | Basic / higher / additional; basic and higher rose 2 points from 6 Apr 2026 |
| Overdrawn director's loan (s455) | 35.75% | Company pays this if a director's loan is unpaid 9 months and 1 day after year end; 35.75% on loans made on or after 6 Apr 2026 (33.75% before), reclaimable once repaid |
| Corporation Tax (final return) | 19% to 25% | 19% up to £50,000 profit, 25% over £250,000, marginal relief between |
| VAT registration threshold | £90,000 | Deregister via form VAT7 once trading stops |
Worked example: extracting £24,000 of reserves on closure
Say your company has stopped trading with £24,000 of cash left after settling its final Corporation Tax, VAT and PAYE. You are the sole director-shareholder and a higher-rate taxpayer.
Because the distribution is under the £25,000 limit, the whole £24,000 is treated as capital on strike-off, not as a dividend. After your annual CGT exempt amount, the gain is taxed under Capital Gains Tax, and if you qualify for Business Asset Disposal Relief the rate is 18% for 2026/27. On the capital route the relieved tax could be roughly £4,000 to £4,300 on that £24,000, depending on your available CGT allowance.
Take the same £24,000 as a final dividend instead and, after the £500 dividend allowance, a higher-rate taxpayer pays 35.75%, around £8,400. That is close to double the tax for the sake of one decision on how you close down. Cross the £25,000 line by even £1, though, and the capital route is lost entirely unless you pay for a members' voluntary liquidation, which is why the order and size of your final distribution matters more than the DS01 itself.
The anti-phoenixing trap: don't restart a similar business within two years
If you take your company's reserves as capital on winding-up and then start or join a similar trade within two years, HMRC's Targeted Anti-Avoidance Rule (TAAR) can re-tax the whole distribution as an income dividend, wiping out the capital treatment and any Business Asset Disposal Relief. It exists to stop "phoenixism", closing a company to bank low tax, then carrying on the same business under a new one.
The TAAR bites when all of these apply: you held at least 5% of the company, it was a close company, you carry on a similar trade or activity within two years of the distribution, and one main purpose is to gain a tax advantage. If you genuinely intend to stop, keep evidence of that; if you might start again soon, take advice before you strike off, because the capital route may not hold.
What tax must you settle before closing?
Before you strike a company off you must file a final Company Tax Return and pay any Corporation Tax, submit a final VAT return and deregister, close the PAYE scheme and pay final liabilities, and clear any overdrawn director's loan. Closing the company does not cancel these obligations, and unpaid tax is the most common reason HMRC objects to a strike-off.
- Corporation Tax: file a final Company Tax Return covering the period to the date trading stopped, and pay any tax due. The main rate is 25% for profits over £250,000 and 19% for profits up to £50,000, with marginal relief between.
- VAT: if registered (the threshold is £90,000 turnover), submit a final return and cancel registration on form VAT7. You can also deregister voluntarily once trading stops, even if you were below the £90,000 limit.
- PAYE: pay final liabilities, submit the final FPS and close the scheme.
- Director's loan: if you owe the company money, repay it before closing. An overdrawn director's loan account left unpaid 9 months after the year end triggers an s455 charge (35.75% on loans made on or after 6 April 2026, 33.75% before), and can be taxed as income if it is written off.
Extracting the final profits tax-efficiently
How you take the last of the company's reserves matters. Distributions of up to £25,000 on closure are usually treated as capital, taxed under Capital Gains Tax rather than as a dividend, and may qualify for Business Asset Disposal Relief at 18% for 2026/27 (the rate rose from 14% in 2025/26) on up to £1 million of lifetime gains. Above £25,000, the whole distribution is generally taxed as income unless a formal members' voluntary liquidation (MVL) is used.
Whether the capital route is worth it depends on your gain and your other income, so it is worth reading our guides to how much Capital Gains Tax you pay and closing a limited company tax-efficiently before you decide how to extract the final reserves.
If you take reserves as a final dividend instead, only the first £500 dividend allowance is tax-free; beyond that, dividends are taxed at 10.75%, 35.75% or 39.35% depending on your band (the basic and higher rates rose by 2 percentage points from 6 April 2026). With a personal allowance of £12,570, the higher-rate threshold at £50,270 and the additional rate from £125,140, timing the extraction across tax years can save real money. It is worth planning before you file the DS01; our company secretarial services team can map the most efficient route.
What happens if someone objects to the strike-off?
Creditors, HMRC or other interested parties can object to a strike-off, most often when tax or a debt is outstanding, which is exactly why you clear liabilities first. If a company is struck off with debts still owing, directors can be held personally liable, and the company can be restored to the register for up to six years from dissolution (by administrative restoration or court order), with no time limit where the restoration is to pursue a personal-injury claim against the company. If you need to reverse a strike-off, our guide on how to restore a dissolved company sets out both routes.
Frequently asked questions
How much does it cost to close a limited company?
The Companies House fee for a DS01 voluntary strike-off is £13 online or £18 by post, in force from 1 February 2026. That single fee is all it costs to strike the company off. The real cost is the tax on any reserves you extract and, usually, an accountant's fee to prepare the final accounts, Company Tax Return and VAT or PAYE deregistrations.
How long does it take to close a limited company?
A DS01 strike-off usually takes about two to three months. Companies House publishes a first notice in The Gazette, and if no one objects a second notice follows and the company is dissolved. Clearing tax and creditors first avoids the objections that can delay or stop the process.
Can I close a dormant company the same way?
Yes. A dormant company that has never traded, or stopped trading over three months ago, is one of the simplest DS01 cases, provided final accounts and any tax returns are up to date and the company owes nothing. A dormant company still has filing duties right up to closure, so make sure its record is current first; our guide to dormant company accounts and how to file them covers the lighter-touch accounts you may still owe.
How much tax do I pay on the final distribution when I close my company?
If total distributions on closure are £25,000 or less, the whole amount is treated as capital and taxed under Capital Gains Tax, and may qualify for Business Asset Disposal Relief at 18% for 2026/27. If distributions exceed £25,000, HMRC treats the whole amount as a dividend (taxed at 10.75%, 35.75% or 39.35%) unless you use a formal members' voluntary liquidation. The £25,000 limit applies to the company as a whole, not per shareholder.
What happens to money left in the bank when a company is struck off?
Any cash or assets remaining at dissolution become bona vacantia and pass to the Crown. Always distribute funds to shareholders and close the bank account before the company is struck off.
Do I need an accountant to file a DS01?
No, the DS01 itself is straightforward. The value of an accountant is in the work around it: final returns, VAT deregistration, closing PAYE and extracting reserves as capital rather than income to cut your tax bill. See our FAQ for more on what closure support includes.
How long after dissolution must I keep records?
Keep all company records, including accounts and bank statements, for at least seven years from the dissolution date, in case of an HMRC enquiry or a restoration claim. A company can be restored to the register for up to six years from dissolution. If you would like us to handle the final accounts, deregistrations and DS01 from start to finish, get in touch with Zmartly and we will close it properly.
