How to Close a Limited Company: Strike Off or MVL (2026)

Quick answer: To close a solvent limited company, you either strike it off by filing form DS01 with Companies House (£13 online or £18 on paper as of 2026) or appoint a liquidator for a members' voluntary liquidation (MVL). Before a strike-off you must stop trading for 3 months, pay all debts and tax, file final accounts with HMRC, and distribute any remaining assets.

Whether you are retiring, going back to employment or returning to life as a sole trader, knowing how to close a limited company properly protects you from fines, tax surprises and the loss of money left in the business. This 2026 guide compares strike off and MVL, explains what to do if the company is insolvent, and walks through the final tax, invoicing and record-keeping steps. If you are weighing up the structures for your next venture, see sole trader vs limited company.

Note: This is general information, not legal or tax advice. Closing a company has tax consequences for the shareholders, so speak to an accountant or insolvency practitioner before you act.

Your options for closing a limited company

GOV.UK's guide to closing a limited company splits the options by whether the company can pay its bills:

Route	Company status	Who runs it	Cost and notes
Strike off (DS01)	Solvent	Directors	£13 online (£18 paper) Companies House fee; usually the cheapest route
Members' voluntary liquidation	Solvent	Licensed insolvency practitioner	Professional fees; suits larger reserves
Dormant company	Not trading	Directors	Annual accounts and confirmation statement still due
Creditors' voluntary liquidation	Insolvent	Licensed insolvency practitioner	Creditors' interests come first
Administration or compulsory liquidation	Insolvent	Administrator or court	Usually where creditors take action

If the company cannot pay its debts, the directors' duty shifts to protecting creditors. Get advice from an insolvency practitioner or solicitor before doing anything else, and do not try to strike off to avoid creditors.

Signs your company may be insolvent

A company is generally insolvent if it cannot pay its debts as they fall due, or if its liabilities are greater than its assets. Warning signs include falling behind with HMRC, using new customer payments to clear old supplier bills, and directors lending money just to meet payroll. If any of these apply, stop and take advice before distributing anything to shareholders or applying to strike off. Directors who continue trading when they know the company cannot avoid insolvency can face personal consequences, and payments to themselves or connected people in that period can be challenged later by a liquidator. A short conversation with a licensed insolvency practitioner is usually free at the first stage and clarifies which route is open.

How to strike off a limited company

Striking off removes the company from the Companies House register. You can only use it if, in the last 3 months, the company has not traded or sold stock and has not changed its name, and it is not threatened with liquidation or subject to an arrangement with creditors.

Step-by-step: closing down before the DS01

1. Stop trading and finish work in progress. Complete outstanding jobs, then issue final invoices for everything delivered.
2. Collect every debt owed to the company. Chase unpaid invoices firmly; our guide to an overdue invoice covers the process. Anything uncollectable should be written off as a bad debt in the final accounts.
3. Deal with employees. Follow redundancy rules, pay final wages and tell HMRC you have stopped employing people.
4. Close VAT. If registered, submit your final VAT return (see how to file a VAT return) and deregister.
5. Prepare final accounts and the Company Tax Return. Send them to HMRC marked as final trading accounts and pay all Corporation Tax. A loss in the final year may be carried back under terminal loss relief.
6. Pay every other creditor, including your accountant, suppliers and any director's loan owed by the company. If a director owes the company money, clear the director's loan account first.
7. Distribute the remaining assets to shareholders before applying. Anything left passes to the Crown.
8. Wait out the 3-month rule from the last trade or name change.
9. File the DS01 online or by post. A majority of directors must sign, and you cannot pay the fee with a cheque from the company's own account.
10. Send a copy within 7 days to shareholders, creditors, employees, pension fund managers or trustees, and any director who did not sign. Missing this can lead to a fine or prosecution.

What happens after you apply

Companies House checks the form and, if it is correct, publishes a notice in The Gazette. If nobody objects, the company is struck off when the two-month notice period ends, and a second Gazette notice confirms it no longer exists. From that point you lose access to the company bank accounts. The full rules are on GOV.UK's page on closing down a company before striking off.

Tax on the money you take out: the £25,000 rule

How the final distribution is taxed often decides which route to use. Under a strike-off, the amount distributed to shareholders can be treated as a capital distribution, taxed under Capital Gains Tax on your Self Assessment return, but only if it is not more than £25,000. GOV.UK says that above £25,000, it is treated as income and charged Income Tax, which in practice means dividend tax rates. Business Asset Disposal Relief may reduce Capital Gains Tax for qualifying shareholders. In an MVL, distributions by the liquidator are generally treated as capital whatever the amount, subject to anti-avoidance rules if you start a similar business, which is why companies with larger reserves use that route.

Worked example: is this company under £25,000?

Kestrel Consulting Ltd has stopped trading. Its position before closure:

Item	Amount
Bank balance after final invoices are paid	£31,200
Less Corporation Tax for the final period	-£4,800
Less final VAT return payment	-£1,350
Less accountant's final accounts fee	-£900
Less DS01 strike-off fee (online)	-£13
Cash available to distribute	£24,137

£31,200 - £4,800 - £1,350 - £900 - £13 = £24,137, which is under £25,000. The owner can distribute it before applying to strike off and treat it as a capital distribution, subject to their own Capital Gains Tax position. If one more client had paid a final £1,500 invoice, the total would have been £25,637, over the limit, and the whole distribution would be taxed as income unless the company used an MVL. Run this calculation before you raise your last invoices.

Members' voluntary liquidation (MVL)

An MVL is a formal process for closing a solvent company. GOV.UK's guide to a members' voluntary liquidation sets out the steps:

1. A majority of directors sign a declaration of solvency, in front of a solicitor or notary, stating the company can pay its debts with interest within no more than 12 months.
2. Shareholders hold a general meeting within 5 weeks of the declaration and pass a resolution for voluntary winding up.
3. They appoint an authorised insolvency practitioner as liquidator.
4. The resolution is advertised in The Gazette within 14 days.
5. The declaration of solvency is sent to Companies House within 15 days of the resolution.
6. The liquidator realises assets, pays creditors, distributes the surplus to shareholders and then dissolves the company.

Liquidator fees make an MVL much more expensive than a £13 online strike-off, so it usually only pays off when the reserves are well above £25,000.

When an MVL starts to make sense

Consider a company with £80,000 of cash left after all tax and creditors are paid. Under a strike-off, the distribution is well over the £25,000 limit, so the whole £80,000 would be treated as income and taxed at dividend rates. Through an MVL, the liquidator's distribution would normally be treated as a capital distribution, potentially taxed under Capital Gains Tax with the possibility of Business Asset Disposal Relief. The difference in tax can easily exceed the liquidator's fees at that level, which is why accountants often suggest an MVL once reserves are comfortably above £25,000. Below the limit, the extra cost of an MVL is rarely justified. Ask your accountant to run both scenarios with your actual figures before deciding.

Strike off vs MVL: which should you choose?

Factor	Strike off	MVL
Company must be solvent	Yes	Yes
Official fee	£13 online, £18 paper	Insolvency practitioner fees
Who distributes assets	Directors, before applying	The liquidator
Capital treatment of distribution	Up to £25,000 only	Generally all of it
Formal check of debts	No; creditors can object	Yes, by the liquidator
Typical use	Small, simple companies	Companies with larger reserves or assets

A realistic timeline for a strike-off

Stage	Typical timing	Key tasks
Wind-down	Month 1	Finish jobs, issue final invoices, notify clients, stop new work
Collection and settlement	Months 1 to 3	Collect debts, pay suppliers, final payroll, final VAT return
Final accounts and tax	Months 2 to 4	Final statutory accounts and Company Tax Return to HMRC, pay Corporation Tax
Distribution	Month 4	Distribute remaining cash and assets to shareholders
Application	After 3 months with no trading	File DS01, send copies to interested parties within 7 days
Gazette notice	About 2 months	Wait for objections; respond to any queries
Dissolution	End of notice period	Second Gazette notice; company no longer exists

The middle stages depend mostly on how quickly customers pay and how quickly your accountant can finalise the books. The three-month no-trading rule and the two-month Gazette notice are the fixed parts, so a clean strike-off rarely takes less than about five to six months from your last day of trading.

If someone objects

Creditors, HMRC and other interested parties can object during the Gazette notice period, which holds up the strike-off while the issue is resolved. The most common reason for an objection is unpaid tax or an unfiled return, which is another reason to settle HMRC completely before applying. If the company starts trading again or you decide to keep it after all, speak to Companies House about withdrawing the application rather than letting it run.

Restoring a struck-off company

If you discover money, property or a debt owed to the company after it has been dissolved, those assets belong to the Crown and the company would have to be restored to the register to reclaim them. Restoration takes time and usually professional help, costing far more than the original strike-off fee. A careful final reconciliation of the bank account, unpaid invoices and any refunds due from HMRC or suppliers avoids that problem.

Dormant or closed: choosing for your situation

Not every company that stops trading needs to be closed. Keeping a company dormant costs a little admin each year but preserves the company name and number if you think you might restart. Closing removes the annual filing burden and any risk of late filing penalties for accounts you forget about. As a rule of thumb, close the company if you are certain you will not use it again, and keep it dormant if a restart within a year or two is genuinely likely.

Invoicing, records and loose ends

• Issue final invoices from the company, showing its full name, number and registered office, as set out in our guide to limited company invoice requirements. Ask clients to pay within a short term so the money arrives before you distribute.
• Cancel recurring billing and subscriptions and tell customers who to contact in future.
• Tell everyone else who needs to know, including your bank, insurers, landlord, software providers and any trade bodies, so accounts and policies are closed in the right order. Keep the company bank account open until the last payment has cleared and the final distribution has been made.
• Keep records for 7 years after strike-off, including invoices, bank statements and final accounts. See how long to keep invoices.
• Stay current with filings until the end. Overdue accounts or a missed confirmation statement can delay or block the strike-off.
• If you will keep working as a sole trader, register for Self Assessment and start new invoices in your own name; our sole trader invoice guide shows the format.

Close your limited company cleanly

Knowing how to close a limited company comes down to three decisions: is it solvent, how much is left to distribute, and have you settled every tax and creditor first. For most small companies with under £25,000 left, a DS01 strike-off is quick and cheap; above that, an MVL is often worth its fees. Start by sending your final invoices from the free invoice generator, then collect, settle and distribute before you apply. Download the result as a PDF invoice you can email, print or upload to a client portal.