How to make a company dormant in the UK (and keep it compliant)

To make a UK limited company dormant, stop trading, tell HMRC the company is dormant for Corporation Tax, and close any VAT or payroll registrations you no longer need. There’s no form to send to Companies House – but a dormant company must still file annual accounts and a confirmation statement every year, or it risks penalties and being struck off.

Here’s exactly how it works, step by step.

What does “dormant” actually mean?

There are two definitions, one for each government body:

• Companies House: a company is dormant if it has had no “significant accounting transactions” during its financial year. Paying Companies House fees, late filing penalties and money received for shares when the company was formed don’t count.
• HMRC: a company is dormant for Corporation Tax if it isn’t doing business, isn’t trading and isn’t receiving any income – including bank interest.

That last point catches people out. A company with a bank account that earns even a small amount of interest isn’t dormant for HMRC.

Why make a company dormant?

Common reasons include:

• you want to protect a company name for future use
• you’ve registered a company ahead of launching a business
• the business is on pause – for example while you take a job, travel or have a baby
• it’s a holding company that doesn’t trade itself

If you’re sure you’ll never use the company again, closing it (striking it off) may be the better option – see the comparison further down.

How to make your company dormant: step by step

1. Stop trading and settle your affairs. Collect money you’re owed, pay your suppliers and wind down any contracts. The company shouldn’t have income or business spending from now on.
2. Tell HMRC the company is dormant. You can do this through your company’s HMRC online account or by contacting HMRC’s Corporation Tax services. You may need to file a final Company Tax Return up to the date trading stopped.
3. Cancel your VAT registration if you were VAT registered and no longer make taxable supplies. You must tell HMRC within 30 days.
4. Close your PAYE scheme if nobody is being paid through payroll any more.
5. Check your bank account. An account that earns interest can stop the company counting as dormant for HMRC. Consider a non-interest account or closing it.
6. Keep filing with Companies House every year – see the next section.

What a dormant company still needs to file

Dormant accounts are much simpler than trading accounts – usually just a balance sheet – but the deadlines and penalties are exactly the same. File late and Companies House charges an automatic penalty, starting at £150 for a private company.

Since 18 November 2025, every director also needs to have verified their identity with Companies House, even if the company is dormant. If you haven’t done it yet, our identity verification service takes care of it for £59.

How to restart a dormant company

When you’re ready to trade again:

1. Tell HMRC within 3 months of starting to do business, so the company is registered for Corporation Tax again.
2. Re-register for VAT if your taxable turnover goes over the VAT threshold (currently £90,000) or you choose to register voluntarily.
3. Set up payroll if you’ll pay yourself or anyone else a salary.
4. Switch to full accounts for the first year you trade. Our £99 accounts for companies with turnover under £5,000 are designed for exactly this stage.

Dormant company or close it down?

If there’s any chance you’ll use the company again, keeping it dormant is usually simpler. If not, striking it off saves the yearly filings.

Frequently asked questions

Do I need to tell Companies House my company is dormant?

There’s no separate form. Companies House sees that your company is dormant from the dormant accounts you file each year. You do need to tell HMRC.

Can a dormant company have a bank account?

Yes. But if the account earns interest, the company may not count as dormant for Corporation Tax. Many people switch to an account that pays no interest.

How long can a company stay dormant?

There’s no time limit. A company can stay dormant for as long as you like, as long as it keeps filing its accounts and confirmation statement on time.

Does a dormant company need an accountant?

Not legally, but missing a filing deadline still leads to penalties. PeekaBooks prepares and files dormant company accounts for a fixed £69, so you never have to think about it.

Keep your dormant company in good standing

Dormant doesn’t mean forgotten. With PeekaBooks your dormant accounts are prepared and filed on time, every year, for a fixed £69 – and if you decide to start trading again, we’ll help you make the switch. Get a free quote.