Dissolving a Limited Company
Published / Last Updated on 25/08/2021
New guidance has been issued by Companies House when voluntarily shutting down, winding up or dissolving a limited company, known formally as ‘striking off’.
The company being dissolved should:
- Be a voluntary shut down and not forced.
- Not have traded for the 3 months prior to the ‘application to strike’.
- Not be threatened by liquidation or insolvency.
- There be no creditor agreements such as a Company Voluntary Arrangement (CVA) in place.
The director(s) of the limited company must:
- Make announcements, arrangements and deal with employees (if any) under normal redundancy rules.
- Ensure all debtors and creditors balances are settled in full.
- Submit final accounts and pay any corporation taxes due.
- Distribute all company funds to shareholders.
- If any monies are left in the company at the point of dissolution, the bank account is frozen and it becomes the property of the crown.
Application to dissolve
An online dissolution form can be submitted to Companies House or a paper form DS01 can be used. Companies House will then make an announcement in the relevant Gazette. This will either be the London Gazette, the Belfast Gazette or the Edinburgh Gazette. After 2 months, assuming no intervention or objections, the company is dissolved.
Taxes
When distributing remaining capital and retained profits, if this is below £25,000 it will be taxable as dividends, if more it will be taxable as capital gains tax and may then attract entrepreneurs relief.
