How to Close a UK Company (Without Losing Your Mind)
Jan 02, 2024 • Tom
How to Close a UK Company (Without Losing Your Mind)
📅 Last Updated: March 12, 2024
✍️ Author: Tom
So, you’ve had enough of running your UK company. Maybe business is slow, maybe you’re moving to a tropical island, or maybe you just can’t deal with filing another tax return. Either way, it’s time to shut it down—properly.
But closing a UK company isn’t as easy as just ghosting Companies House (trust me, they will find you). Let’s walk through your options and the steps to do it the right way.
1. Decide: Dissolution or Liquidation?
Before you start pulling the plug, you need to choose the right exit strategy.
🔹 Dissolution (Striking Off) – The Peaceful Goodbye
✅ For small, solvent companies (no debts)
✅ Cheap and quick
✅ Requires notifying HMRC & settling taxes
🔹 Liquidation – The Messy Breakup
❌ For companies with debts
❌ Involves hiring a liquidator (£££)
❌ Can affect your ability to run future businesses
💡 If you owe money and just try to “disappear,” expect angry letters, potential legal trouble, and maybe even a court order.
2. Closing a UK Company via Dissolution (Easy Way)
If your company has no debts and you’re ready to shut it down, this is the easiest option.
✅ Steps to Dissolve Your Company
1️⃣ Check if you’re eligible
- No outstanding debts (taxes, loans, unpaid invoices)
- No ongoing legal action against your company
- You haven’t traded in the last 3 months
2️⃣ Settle any remaining business affairs
- Pay final bills, taxes, and VAT (because HMRC always gets paid first)
- Close business bank accounts
3️⃣ Submit a DS01 Form (Get it here)
- Costs £10 (yes, Companies House will charge you to leave)
- Signed by the majority of directors
- Send to Companies House by post
4️⃣ Wait for Objections (Fingers Crossed 🤞)
- Companies House will publish a notice in the Gazette
- If no one objects within 2 months, your company is struck off
- If someone objects (e.g., creditors), expect drama
5️⃣ Receive the Official Confirmation
- Once removed from the register, your company no longer exists
3. Closing a UK Company via Liquidation (If You Have Debts)
If your company owes money and you can’t pay it back, you need to go through liquidation.
🔹 3 Types of Liquidation
🟢 Members' Voluntary Liquidation (MVL) – If you can pay debts but just want to close
🔴 Creditors' Voluntary Liquidation (CVL) – If you can’t pay debts and want to close
🚨 Compulsory Liquidation – If HMRC or creditors take legal action against you
💡 Translation:
- If you decide to close, it’s voluntary.
- If creditors force you to close, it’s not so fun.
✅ Steps to Liquidate Your Company
1️⃣ Hire a Licensed Insolvency Practitioner
- They’ll handle the legal side & deal with angry creditors
- Expect to pay at least £4,000+ for their services
2️⃣ Stop Trading Immediately
- Continuing to trade while insolvent is illegal
3️⃣ Liquidator Sells Company Assets
- Anything valuable is sold to pay creditors
4️⃣ Creditors Get Paid (If There’s Money Left)
- HMRC is always first in line (of course)
5️⃣ Company is Removed from the Register
- You’ll receive a letter confirming the company’s official closure
💡 If you just ignore debts and hope for the best, you might be banned from being a director in the future!
4. Tax Implications When Closing a Company
🚨 Yes, even in death, your company must pay its final taxes.
- Corporation Tax → Submit a final tax return to HMRC
- VAT Deregistration → Cancel VAT registration if applicable
- PAYE & Employees → Inform HMRC about employees leaving
- Capital Gains Tax (if selling assets)
💡 HMRC hates being ghosted, so make sure you send all necessary paperwork before walking away.
5. What Happens to Your Company Name?
Once your company is dissolved, the name becomes available again.
✅ Allowed:
- You can register a new company under the same name (if no one else has taken it).
- You can use the name for branding as a sole trader.
❌ Not Allowed:
- If your company was liquidated, you cannot register the same name for 5 years.
💡 Yes, someone else could grab your old company name. If that worries you, consider keeping the business name dormant instead of closing it!
6. Alternatives to Closing a Company
If you’re not 100% sure about closing, you have other options:
🔹 Sell the Company – If it’s profitable, someone might buy it.
🔹 Make It Dormant – Costs £0 to keep it inactive and file minimal paperwork.
🔹 Transfer Ownership – Let someone else take over.
🎯 Quick Summary
✔️ Dissolution (DS01) → For solvent companies, costs £10, takes 2-3 months
✔️ Liquidation → If you owe debts, costs £4,000+, requires a liquidator
✔️ Tax Obligations → Final Corporation Tax return & VAT deregistration
✔️ Your Company Name → Can be re-used unless liquidated
✔️ Alternatives → Sell, make dormant, or transfer ownership
🚀 Done right, closing your company can be stress-free. Done wrong, and you might have legal trouble knocking on your door.
📌 Need UK Company Insights?
🔍 Check out Datadini.ai for real-time UK business data!
📌 Official Links:
🔥 Closing your company? Make sure you do it right!
AI-Powered UK Company Data at Your Fingertips.
Try Datadini Now