Dormant Company in the UK: Complete Guide for 2025
Running a business doesn’t always mean trading continuously. Whether you’re pausing operations temporarily, holding assets, or reserving a company name for future use, understanding dormant company status can save you money and administrative hassle.
At FSL Accountancy Ltd, we help business owners navigate the complexities of maintaining dormant companies while staying fully compliant with Companies House and HMRC regulations.
What is a Dormant Company?
A dormant company is essentially a company that has no significant accounting transactions during a financial year. According to Companies House and HMRC, a company is considered dormant when it has no business activity.
Companies House Definition
For Companies House purposes, a company is dormant if it has had no significant accounting transactions during the accounting period. Significant transactions include:
- Sales revenue from trading activities
- Purchases of goods or services
- Salaries and wages payments
- Director fees (except qualifying fees)
- Asset acquisitions or disposals
HMRC Definition
HMRC’s definition is slightly different. A company is dormant for Corporation Tax purposes when it has no income or capital gains and hasn’t started trading. This means a company can be dormant with Companies House but not with HMRC, and vice versa.
Transactions that DON’T affect dormant status:
- Filing fees paid to Companies House (£12-£50)
- Penalties for late filing
- Money paid for shares when the company was incorporated
Why Make Your Company Dormant?
There are several legitimate business reasons to maintain a dormant company:
Protecting Your Company Name
If you’ve registered a valuable trading name but aren’t ready to start trading, keeping the company dormant preserves that name for your exclusive use. This is particularly important in competitive industries where company names carry brand value.
Pausing Business Operations
Perhaps you’re taking a career break, waiting for market conditions to improve, or exploring other opportunities. Making your company dormant allows you to maintain the corporate structure without the burden of active compliance requirements.
Holding Assets
Many business owners use dormant companies to hold intellectual property, property assets, or investments. This structure can provide asset protection and potential tax planning benefits.
Future Trading Plans
If you’re planning to start a business in the future, incorporating now and keeping the company dormant means you’ll have established company age and credit history when you’re ready to trade.
Dormant Company Filing Requirements
Even though your company isn’t trading, you still have legal obligations to Companies House and potentially HMRC.
Companies House Annual Requirements
Confirmation Statement (formerly Annual Return)
- Must be filed at least once every 12 months
- Filing fee: £13 online or £40 by post
- Deadline: Within 14 days of the review date
- Late filing penalty: £150+
Dormant Company Accounts
- Must file dormant accounts annually
- Can use simplified dormant accounts format (just a balance sheet)
- Filing deadline: 9 months after your financial year end
- Late filing penalties start at £150 for private companies
You can learn more about filing deadlines on the Companies House website.
HMRC Obligations
Corporation Tax
- If dormant for Corporation Tax purposes, you don’t need to file CT600 returns
- You must inform HMRC your company is dormant
- No Corporation Tax liability on dormant companies
VAT Registration
- If your company is VAT registered, you should deregister if you’ve stopped trading
- Failure to deregister can result in ongoing VAT return obligations
- Visit HMRC’s VAT guidance for more information
How to Make Your Company Dormant
The process of making your company dormant involves several steps:
Step 1: Cease All Business Activity
Stop all trading activities, including:
- Selling products or services
- Making purchases
- Paying salaries (except final payments)
- Generating any income
Step 2: Notify Companies House
You don’t need to formally notify Companies House that your company has become dormant. When you file your next accounts, simply prepare dormant company accounts instead of full accounts.
Step 3: Inform HMRC
Contact HMRC to notify them your company is dormant for Corporation Tax purposes. You can do this by:
- Calling the Corporation Tax helpline on 0300 200 3410
- Writing to your Corporation Tax office
- Through your online business tax account
Step 4: File Dormant Accounts
Prepare simplified dormant accounts showing:
- A balance sheet
- Required notes to the accounts
- Directors’ signatures
At FSL Accountancy Ltd, we can prepare and file your dormant accounts efficiently and accurately.
Costs of Maintaining a Dormant Company
While dormant companies have reduced compliance costs, there are still expenses to consider:
Annual Filing Fees:
- Confirmation Statement: £13
- Registered office address (if using an accountant): £50-£150
- Dormant accounts preparation: £100-£300
Optional Services:
- Professional registered office: £50-£150 annually
- Companies House filing service: £50-£100
Many business owners find that using an accountancy firm like FSL Accountancy Ltd provides peace of mind that all filings are completed correctly and on time, avoiding penalties.
Penalties for Non-Compliance
Failing to file your dormant company accounts or Confirmation Statement results in automatic penalties:
Late Filing Penalties
Accounts Filing Penalties:
- 1 day late: £150
- 3 months late: £375
- 6 months late: £750
- More than 6 months late: £1,500
These penalties apply even if your company is dormant and has no assets or income.
Confirmation Statement Penalties:
- Late filing: £150+
- Continued failure can lead to company strike-off
Learn more about Companies House penalties on the official guidance pages.
Reactivating a Dormant Company
When you’re ready to start trading again, reactivating your dormant company is straightforward:
Notification Requirements
- Inform HMRC – Register for Corporation Tax if not already done
- VAT Registration – If expecting turnover over £90,000 (2024/25 threshold)
- PAYE Registration – If you’ll be employing staff or paying director salaries
- Update accounting records – Switch from dormant to full accounts format
First Active Accounts
Your first set of active accounts must:
- Cover the period from the start of the accounting period
- Include full profit and loss account
- Comply with applicable accounting standards (FRS 102 or FRS 105)
Common Mistakes to Avoid
Assuming No Filing Requirements
The most common mistake is thinking dormant means no obligations. Even dormant companies must file annual documents with Companies House.
Paying Yourself a Salary
Paying director salaries makes your company non-dormant. If you need income from your company, consider paying a small dividend instead (though this too makes the company active).
Mixing Dormant and Active Periods
If your company trades for part of the year, it’s not dormant for that year. You must file full accounts covering the entire period.
Forgetting to Deregister for VAT
Remaining VAT registered while dormant creates unnecessary compliance work. Deregister once you stop trading to avoid quarterly VAT return obligations.
Is Keeping Your Company Dormant Right for You?
Maintaining a dormant company makes sense if you:
- Want to preserve a valuable company name
- Plan to resume trading in the foreseeable future
- Need to hold assets in a corporate structure
- Are taking a temporary break from business
However, if you have no plans to use the company again, voluntary strike-off or dissolution might be more appropriate. Read more about company dissolution options on Companies House.
How FSL Accountancy Can Help
At FSL Accountancy Ltd, we provide comprehensive dormant company services:
- Dormant accounts preparation and filing
- Confirmation Statement filing
- Registered office services
- HMRC notifications
- Reactivation support when you’re ready to trade
- Deadline monitoring to avoid penalties
Our fixed-fee dormant company packages start from just £150+VAT annually, providing you with complete peace of mind that your compliance obligations are met.
Get Expert Dormant Company Support
Whether you’re making your company dormant, maintaining dormant status, or ready to reactivate, professional support ensures you remain compliant and avoid costly penalties.
Contact FSL Accountancy Ltd today for a free consultation about your dormant company needs. Our experienced team understands UK company law and can guide you through every step of the process.
Call us on [insert phone number] or email [insert email] to discuss how we can help with your dormant company requirements.
Frequently Asked Questions
Can I close my dormant company’s bank account? Yes, many dormant companies close their bank accounts to avoid monthly fees. However, keep the account open if you plan to reactivate soon.
Do I need an accountant for a dormant company? While not legally required, using an accountant ensures accurate filing and helps avoid penalties. The cost is typically minimal compared to potential fines.
How long can a company remain dormant? Indefinitely, as long as you continue filing the required annual documents with Companies House.
Can I make my company dormant immediately after incorporation? Yes, if you incorporate but don’t start trading, your company can be dormant from day one.
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