Closing a company is not as simple as locking the door and walking away. There are several legal ways to close a solvent company in England and Wales, and choosing the right one affects tax, cost and your obligations. (If your company is insolvent (unable to pay its debts) different rules apply; see our separate guide.) Here are the three main options for a solvent company.
Option 1: Voluntary strike-off (dissolution)
For a small, solvent company that has stopped trading and has few or no assets, the simplest route is voluntary strike-off under section 1003 of the Companies Act 2006, using form DS01.
You can apply only if, in the last three months, the company has not: traded, changed its name, or disposed of property for value (other than winding-up steps), and it is not subject to insolvency proceedings. You must:
- deal with any remaining assets first (anything left at dissolution passes to the Crown as bona vacantia);
- settle debts and close payroll/VAT and accounts with HMRC; and
- send a copy of the application to members, creditors, employees and other notifiable parties within 7 days.
Strike-off is cheap, but it is not appropriate if there are significant assets to extract tax-efficiently.
Option 2: Members' Voluntary Liquidation (MVL)
For a solvent company with significant assets to distribute, a Members' Voluntary Liquidation is often better. A licensed insolvency practitioner acts as liquidator, realises the assets, settles liabilities, and distributes the surplus to shareholders.
An MVL requires the directors to make a statutory declaration of solvency (Insolvency Act 1986, s 89), confirming the company can pay its debts in full within 12 months. It can be more tax-efficient for extracting larger sums (potentially as capital rather than income, take tax advice).
Option 3: Make the company dormant
If you might want to use the company again, or to protect the name, you can keep it dormant rather than close it. A dormant company still exists but does not trade; you must continue to file (simpler) dormant accounts and a confirmation statement with Companies House, and tell HMRC it is dormant.
Which option is right?
- Strike-off, cheap and simple for a clean, low-asset company that has stopped trading.
- MVL, for a solvent company with substantial assets, where tax-efficiency matters.
- Dormancy, if you may reuse the company or want to keep the name.
Always take tax advice before extracting assets, and settle HMRC, employees and creditors properly.
Key takeaways
- Three main routes to close a solvent company: voluntary strike-off (DS01), Members' Voluntary Liquidation (MVL), or making it dormant.
- Strike-off suits clean, low-asset companies; deal with assets first (or they pass to the Crown).
- MVL suits asset-rich companies and can be more tax-efficient, it needs a declaration of solvency.
- Insolvent companies must use insolvency procedures instead.
Sources
- Companies Act 2006, section 1003 (voluntary strike-off; form DS01)
- Insolvency Act 1986, section 89 (declaration of solvency for an MVL)
- HMRC requirements for closing or making a company dormant
--- This article is general information about the law of England & Wales as at 2026, not legal or tax advice. For advice on your circumstances, consult a qualified solicitor or accountant.