Dormant Companies — How to Make a Trade Limited Company Dormant and Keep It Compliant (2026)

There Are Two Different Kinds of Dormant

This is the part that catches most people out. "Dormant" means two slightly different things depending on who you're talking to — HMRC or Companies House — and a company can be dormant for one and not the other. You need to understand both.

Dormant for Corporation Tax (HMRC)

HMRC treats a company as dormant for Corporation Tax when it is not carrying on any business activity and has no income. No trading, no invoicing, no investment income, nothing. If your company is dormant in this sense, HMRC stops expecting a Company Tax Return (the CT600) and you don't pay Corporation Tax for the period. You have to tell HMRC the company has become dormant — they won't assume it. The usual triggers are that the company has never traded, or that it has stopped trading and disposed of any stock.

Dormant for Companies House (accounts)

Companies House has a more technical test. A company is dormant for accounts purposes if it has had no "significant accounting transactions" during the financial year. A significant accounting transaction is essentially any entry that the company would normally have to record in its accounting records. Crucially, two things are ignored and do not break dormancy: filing fees paid to Companies House, and money paid for shares when the company was first incorporated. Almost everything else counts.

Being dormant for Companies House lets you file simplified dormant company accounts instead of full accounts — typically just a balance sheet with a couple of statutory notes, and no profit and loss account or director's report in most cases.

In practice, a trade company that has genuinely stopped all activity is usually dormant for both — but the tests are separate, so always think about them separately.

Why a Trade Might Keep a Dormant Company

Keeping a company dormant rather than closing it costs you very little and preserves options. Common reasons tradespeople do it:

• Protecting a company name: Once a name is registered at Companies House, nobody else can register the same or a confusingly similar name. Keeping the company dormant reserves the name and the matching brand while you decide what to do.
• Between contracts: Contractors who pick up the odd month of self-employment between limited-company contracts can park the company dormant rather than close and re-open it each time.
• Incorporated but not yet started: You set the company up in advance — perhaps to win a tender or open a business bank account — but haven't actually started trading yet. It's dormant until the first job goes through it.
• Pausing the Ltd while working as a sole trader: Some trades drop back to sole-trader status during a quiet period or to simplify their tax for a year, and keep the company dormant in the background ready to switch back.

What You Must Still Do Every Year

Dormant does not mean "forget about it." The company still legally exists, so a reduced set of obligations continues. Miss them and you risk penalties or — in the worst case — the company being struck off involuntarily and its assets passing to the Crown. Here is what you must keep on top of.

1. Tell HMRC the company is dormant for Corporation Tax

Contact HMRC (online, by phone or in writing) to let them know the company is dormant and the date it stopped trading. Once HMRC accepts this, they will normally stop sending Notices to deliver a Company Tax Return, and you won't need to file a CT600 while the company remains dormant. You do not usually have to file anything further with HMRC each year once it is recorded as dormant — but you must tell them again if it starts trading.

2. File dormant company accounts with Companies House

Even while dormant, the company must file accounts with Companies House every year by its filing deadline. For a dormant company these are the simplified dormant accounts — typically a balance sheet showing the position (often just the share capital), with the required statutory statements. There is a free online service for filing dormant accounts (form AA02 for a company limited by shares that was dormant from incorporation, or the equivalent via the standard route). Late filing of accounts triggers automatic Companies House penalties exactly as it would for a trading company, so the deadline still matters.

3. File the confirmation statement

This is the one people forget. The confirmation statement (form CS01) is required every year regardless of whether the company is dormant or trading. It confirms that the information Companies House holds — registered office, directors, shareholders, people with significant control (PSC), SIC code — is correct and up to date. There is an annual filing fee. Dormancy gives you no exemption from this: it is always due.

4. Keep the register and your details up to date

If a director moves house, the registered office changes, or PSC details change, you must still notify Companies House while dormant. Keeping the company on the register and its details current is part of the deal.

What Breaks Dormancy — Be Very Careful Here

This is where good intentions go wrong. Because dormancy for Companies House hinges on having no significant accounting transactions, almost any money moving through the company can end its dormant status and force you back to full accounts and a CT600. Things that can break dormancy include:

• Paying any bill from the company bank account — even a small one
• Invoicing a customer or receiving any payment for work
• Bank charges or account fees debited to the company account
• Bank interest received on a company account — yes, even interest earned can count as a transaction
• Buying or selling assets, paying a director or employee, or settling expenses through the company

The safe rule is simple: route nothing through the company. Don't use the company bank account for anything. Because even credited bank interest can be a problem, many people close the company bank account entirely while the company is dormant, then open a fresh one if and when they reactivate it. With no account and no activity, there's nothing that can accidentally break dormancy.

Close Down Any PAYE Scheme

If you previously ran payroll through the company — paying yourself or anyone else a salary — you should close the PAYE scheme with HMRC once no one is being paid. Leaving an open PAYE scheme means HMRC keeps expecting Real Time Information (RTI) submissions, and missing those generates penalties even though the company is dormant. Tell HMRC the scheme has ceased, submit a final payroll submission, and have the scheme closed. A genuinely dormant company has no employees and no live payroll.

The Alternative: Striking the Company Off

If you are confident you will never use the company again, keeping it dormant is unnecessary admin. The alternative is to close it down voluntarily by applying to strike it off the register using form DS01. Once struck off, the company ceases to exist, you have no further filing obligations, and there is no annual confirmation statement or accounts to deal with.

The trade-off is permanence: striking off releases the name (someone else could register it) and you'd have to incorporate afresh if you ever wanted to trade through a limited company again. Make sure the company has settled any debts, dealt with any assets — anything left in the company passes to the Crown as bona vacantia — and closed its bank account before applying. In short: keep it dormant if you might come back to it; strike it off if you're truly done.

Annual Checklist for a Dormant Trade Company

• Confirm HMRC has the company recorded as dormant for Corporation Tax (one-off, until it trades again)
• File dormant company accounts with Companies House before the filing deadline
• File the annual confirmation statement (CS01) and pay the fee — always required
• Make sure no transactions have gone through the company in the period
• Keep registered office, directors and PSC details up to date
• Ensure any PAYE scheme is closed and no RTI is outstanding
• Keep the company bank account closed (or strictly unused) to avoid stray interest or charges

Quick Reference: Dormant Company Obligations

A Note on Advice

This article is general information for UK trade business owners and is not tax or legal advice. The rules on dormancy, accounts and Corporation Tax can change and your own circumstances may differ. Before making your company dormant — or striking it off — speak to a qualified accountant who can confirm the right approach for your situation and handle the filings correctly.