You have finished your last contract, taken a permanent job or decided that you no longer need your company. Closing it might look like a matter of filling in a form and shutting the bank account.
For many small companies, applying to be struck off the Companies House register is a straightforward way to close. But the application does not replace the work needed to finish the accounts, settle tax bills and deal with any money or assets left in the business.
The aim is to close the company knowing what has been paid, what you can take out and whether anything still needs your attention.
Is strike-off the right way to close your company?
This guide focuses on companies that have stopped trading and can settle their debts.
If your company cannot pay its bills, or owes more than its assets are worth, get advice before paying money to shareholders or applying to close it. Strike-off is not a substitute for dealing with insolvency, and creditors can challenge the closure.
To apply for strike-off, your company must not have traded, sold trading stock or changed its name during the previous three months. There are also restrictions where insolvency proceedings or certain agreements with creditors are involved.
Paying a final accountancy bill or settling an existing business debt is different from continuing to trade. Work needed to finish the company’s affairs does not necessarily restart that three-month period. The reason for a transaction matters, not simply whether money has moved through the bank account.
If you might need the company again, keeping it dormant could be another option. It would still exist, however, and annual accounts and confirmation statements would still need to be sent to Companies House.
Finish the company accounts and tax work
If your company has been trading, its final accounts and Company Tax Return need to go to HMRC, making clear that it has stopped trading and you intend to close it. Any Corporation Tax and other outstanding tax must also be dealt with.
A loss in the final trading period is worth checking too. In some circumstances, it can be used against earlier profits and produce a tax repayment.
Companies House is separate. You do not have to send it a special set of final accounts simply because you are applying for strike-off. But existing annual accounts and confirmation statement deadlines still need checking. Do not assume a planned closure means you can ignore overdue paperwork or letters.
A useful starting point is the last set of accounts filed, followed by everything that has happened since. Having paid last year’s Corporation Tax does not necessarily mean the company’s final tax bill has been covered.
Deal with VAT, payroll and any remaining commitments
If the company is VAT registered, you need to cancel its registration at the appropriate time and submit a final VAT return. There may also be VAT to account for on stock or equipment the company still owns, so check this before transferring anything to yourself.
If you employed staff or paid yourself through a PAYE scheme, there is also a final payroll submission to make. Outstanding pay, tax, National Insurance and any required P45s need dealing with. Where staff are losing their jobs, the normal redundancy rules still apply.
It is also worth going through the company’s regular payments. Software subscriptions, insurance, leases and other contracts may need cancelling or bringing to an end.
Before cancelling access to accounting software or closing the bank account, make sure you have saved the records you will need afterwards. GOV.UK advises keeping business documents for seven years after the company is struck off.
What happens to the money and assets left in the company?
The bank balance is not automatically the amount you can take home.
First, allow for tax, unpaid bills, loans and the costs of closing the company. Check whether customers still owe money, deposits are due back or HMRC owes the company a refund. Those amounts need to be considered before deciding what is left for shareholders.
Anything the company still owns when it is dissolved can pass to the Crown. This includes money in its bank account and payments it becomes entitled to receive later, such as a tax refund. Equipment, vehicles and even a website domain may also need to be sold or transferred before closure.
That is why emptying the bank account is not, by itself, the same as finishing the company’s finances.
Check any money owed between you and the company
If you owe money to your company, do not assume closing it will make the loan disappear. How you repay or otherwise clear it can affect both your personal tax and the company’s tax. Writing it off is not the same as repaying it.
If the company owes you money, check what makes up that balance and how much it can repay. Where money you lent the business cannot be recovered, tax relief may be available, but it is not automatic. Get advice before agreeing to cancel the debt, because choosing to give up repayment is not the same as establishing that the money cannot be recovered.
Will you pay tax on the money you take out?
Closing a company does not make its remaining profits tax-free. The amount paid to shareholders and the way the company closes can affect how that money is taxed.
Under the strike-off rules, final payments to shareholders can generally fall under Capital Gains Tax rather than dividend taxation if the total does not exceed £25,000 and the other conditions are met.
That is a limit for the company’s total distributions, not £25,000 for each shareholder. It is not a tax-free allowance. If the total exceeds £25,000, the distributions normally fall under Income Tax rules, not just the amount above the limit.
Where more money is involved, a members’ voluntary liquidation may be worth comparing with strike-off. This is a formal way to close a company that can pay its debts, handled by a licensed insolvency practitioner. The fees and your personal tax position both need considering before deciding whether it makes sense.
Tell your adviser if you plan to carry on a similar business afterwards. Separate rules can change how liquidation payments are taxed in those circumstances.
The useful time to have this discussion is before taking the money out, not after the company has disappeared from the register.
Apply for strike-off and follow it through
The strike-off application, known as DS01, must be signed by a majority of the company’s directors.
Within seven days of applying, a copy must be sent to the relevant people. These include shareholders, creditors, employees, pension fund managers or trustees, and any directors who did not sign. HMRC must also be notified where it is a creditor.
An accepted application does not mean the company has closed immediately. Companies House publishes a notice in The Gazette, the official public record. If there is no reason to delay, dissolution follows at least two months after that notice. An objection can hold up the process.
Keep checking for correspondence until the closure is confirmed, rather than treating the application receipt as the end of the job.
How Thames Williams can help you close your company
You do not need to work through the accounts, tax and Companies House paperwork on your own.
At Thames Williams, we start by checking what has already been filed, when the company stopped trading and what money, assets or debts remain. We then explain what needs finishing before you apply to close it.
Depending on your company, we can prepare the final company accounts and Company Tax Return, deal with the final VAT and payroll submissions, and review money owed between you and the business. We can also help with the strike-off application and the notices that need to be sent.
If there is a larger amount to take out, we can look at the tax before you decide how to close the company. Where a formal liquidation is appropriate, a licensed insolvency practitioner would carry out that part of the work.
Missing bookkeeping, overdue accounts or earlier tax years may need extra work. We will make that clear and agree the work and fees before starting, rather than assume everything is covered by completing the strike-off form.
Ready to close your limited company?
Tell us the company name, when it stopped trading and whether it still has money, assets or unpaid bills.
You do not need to have everything worked out before contacting us. We will explain what needs doing and how much our help would cost.
Talk to Thames Williams about closing your company
This article provides general guidance. The right way to close your company depends on its finances, tax position and your circumstances.
