Dormant Company Guide UK: Everything You Need to Know

A dormant company is one that has had no significant accounting transactions during an accounting period. Many UK business owners keep a dormant company for future use, to protect a trading name, or while planning their next venture. But even dormant companies have filing obligations. This guide explains everything you need to know about running a dormant company in the UK.

What Makes a Company Dormant?

A company is considered dormant for Companies House purposes if it has had no "significant accounting transactions" during the accounting period. Significant transactions are those that would normally be recorded in your accounting records.

Transactions that count towards being dormant:

The following do NOT count as significant transactions, meaning your company can remain dormant even if it has:

Payment to Companies House for the annual Confirmation Statement filing fee
Payment of a late filing penalty to Companies House
Money paid for shares when the company was incorporated

Transactions that break dormancy:

Any of these transactions would mean your company is no longer dormant:

Trading income or expenditure
Paying dividends
Paying salaries or other employment costs
Purchasing assets
Interest received on bank accounts
Any other business transactions

It's worth noting that HMRC has a slightly different definition of dormancy for Corporation Tax purposes. For HMRC, a company is dormant if it's not active, not liable for Corporation Tax, and hasn't received any income. If your company is dormant for Companies House but has bank interest, you may still need to file a Corporation Tax return.

Why Keep a Company Dormant vs Striking Off?

Before deciding whether to keep your company dormant, consider the alternatives. Here are the key reasons directors choose to maintain a dormant company:

Reasons to keep your company dormant:

Protect your company name: Once dissolved, your company name becomes available for anyone else to register. Keeping it dormant reserves the name.
Preserve trading history: A company with several years of dormant history still has that incorporation date when it reactivates.
Future business plans: If you plan to trade again within the next year or two, keeping the company dormant avoids the cost and hassle of forming a new one.
Holding assets: Some dormant companies hold intellectual property, domain names, or other assets without trading.
Credibility: An older company (even if dormant for periods) may appear more established to clients and suppliers.

Reasons to strike off instead:

Reduce admin burden: Struck-off companies require no further filings.
Clean closure: If you have no intention to trade again and no assets to protect, striking off provides finality.
Cost savings: No more filing fees or accountancy costs for annual returns.

If your company has significant assets or debts, you cannot use the strike-off procedure. You'll need a formal liquidation process instead. See our guide on closing a limited company for all your options.

Filing Requirements for Dormant Companies

Even though your company isn't trading, Companies House still requires annual filings. The good news is that dormant company filings are simplified.

Dormant Company Accounts

You must file annual accounts with Companies House within 9 months of your year-end, just like active companies. However, dormant companies can file special "dormant company accounts" which are much simpler.

What dormant accounts must include:

A balance sheet (usually just showing share capital)
A statement that the company was dormant throughout the period
A note that the accounts have been prepared in accordance with the micro-entities regime (if applicable)

Dormant company accounts don't need:

A profit and loss account
A directors' report
An auditors' report

How to file dormant accounts:

You can file dormant company accounts directly with Companies House using their WebFiling service. There are also approved software providers that can file electronically. The filing is free.

Late filing penalties still apply:

Don't assume that being dormant means Companies House will be lenient. The same late filing penalty structure applies:

1 day late: £150
1 month late: £375
3 months late: £750
6 months late: £1,500

These penalties double for consecutive late filings within a 5-year period.

Confirmation Statement

Every company must file a Confirmation Statement at least once per year, confirming that the information Companies House holds is accurate. This applies to dormant companies too.

The Confirmation Statement confirms:

Registered office address
Directors and their details
Shareholders and share capital
People with Significant Control (PSC)
SIC code

The filing fee is £34 when filed online. You have 14 days after your confirmation date to submit it. Failure to file can lead to your company being struck off and directors potentially facing prosecution.

Corporation Tax for Dormant Companies

When your company becomes dormant, you need to tell HMRC so they don't expect Corporation Tax returns.

How to Tell HMRC Your Company is Dormant

You can notify HMRC that your company is dormant through:

HMRC's online service: Use your company's Government Gateway account
Phone: Call the Corporation Tax helpline on 0300 200 3410
Post: Write to your company's Corporation Tax office

HMRC will mark your company as dormant and won't issue any more Corporation Tax returns until you tell them the company is active again.

Important: Make sure you've filed all outstanding Corporation Tax returns before notifying HMRC of dormancy. Any returns due before the dormancy period must still be submitted.

When You Still Need to File CT Returns

Even if you've told HMRC your company is dormant, you may still need to file a Corporation Tax return if your company:

Receives any income (including bank interest)
Sells or disposes of assets
Has any other chargeable activity

Bank interest is a common catch. If your dormant company's bank account earns interest, HMRC considers this taxable income and may require a Corporation Tax return. Consider closing or zeroing the bank balance to avoid this.

VAT Deregistration

If your company was VAT registered before becoming dormant, you'll want to deregister to avoid the ongoing compliance burden.

You must deregister for VAT if:

Your company stops making taxable supplies (stops trading)
Your taxable turnover falls below the deregistration threshold (currently £88,000)

How to deregister:

You can deregister for VAT online through your Government Gateway account or by completing form VAT7. HMRC aims to process deregistration within 3 weeks.

Final VAT return:

You'll need to submit a final VAT return covering the period up to your deregistration date. This return must account for any VAT on stock or assets you're keeping. In some cases, you may need to pay back VAT you've previously reclaimed on assets.

Cancelling a VAT Direct Debit:

If you pay VAT by Direct Debit, make sure to cancel it after your final payment. Otherwise, HMRC may continue to collect payments.

PAYE Scheme Closure

If your dormant company had a PAYE scheme (because you paid yourself or others a salary), you should close it.

To close your PAYE scheme:

File a final Full Payment Submission (FPS) indicating it's the final submission for the tax year
Complete an Employer Payment Summary (EPS) stating you don't expect to pay any employees in future tax months
You may also want to send a P45 to yourself if you were on the payroll

What if you don't close the scheme?

If you leave a PAYE scheme open but don't file returns, HMRC will issue estimated tax bills and may charge penalties for non-filing. It's better to formally close the scheme than to simply stop filing.

You can close your PAYE scheme through your Government Gateway account or by contacting the HMRC employer helpline.

Reactivating a Dormant Company

When you're ready to trade again, reactivating your dormant company is straightforward.

Steps to reactivate:

Tell HMRC your company is active: Notify them through your Government Gateway account or by phone. HMRC will issue you with a new Corporation Tax return.
Register for VAT if needed: If your taxable turnover will exceed £90,000, you must register. You can also voluntarily register below this threshold.
Set up a new PAYE scheme if required: If you'll be paying yourself or employees a salary, register as an employer.
Update Companies House information: If any company details have changed during dormancy, update them with the Confirmation Statement.
Resume proper bookkeeping: Start recording all transactions from the date you begin trading again.

Timing considerations:

When you reactivate, the date you start trading is important. Your first active accounting period will run from that date, and all deadlines will be calculated accordingly. Make sure you know your new Corporation Tax and accounts filing deadlines.

Costs of Keeping a Company Dormant

Keeping a dormant company isn't free, but it's relatively inexpensive compared to running an active company.

Annual costs:

Item	Cost
Confirmation Statement filing	£34
Dormant accounts filing	Free
Registered office service (if using one)	£50-£150/year
Accountant to prepare dormant accounts (optional)	£50-£150
Total	£34-£334/year

If you prepare and file your own dormant accounts (which is straightforward), and use your own address as the registered office, the only hard cost is the £34 Confirmation Statement fee.

Hidden costs to consider:

Time: You still need to track deadlines and complete filings
Bank account fees: Some business accounts charge monthly fees even with no activity
Opportunity cost: The mental overhead of having an ongoing compliance obligation

For many directors, the minimal cost of maintaining dormancy is worth it to keep options open. But if you're certain you won't use the company again, the ongoing admin may not be worth it.

Common Mistakes with Dormant Companies

Avoid these common pitfalls when managing a dormant company:

1. Missing filing deadlines

Just because you're not trading doesn't mean deadlines disappear. Set calendar reminders for your annual accounts deadline (9 months after year-end) and Confirmation Statement.

2. Forgetting to tell HMRC

If you don't notify HMRC that your company is dormant, they'll keep issuing Corporation Tax returns and may charge penalties for non-filing.

3. Leaving bank interest accruing

Bank interest counts as income and can trigger Corporation Tax obligations. Either close the account or keep balances at zero.

4. Not updating company records

If directors change address, or the registered office address becomes invalid, you're in breach of Companies House requirements even while dormant.

5. Assuming dormancy means no obligations

Dormancy reduces your obligations, but doesn't eliminate them. You still have a duty to maintain accurate records and file annual documents.

Frequently Asked Questions

How long can a company stay dormant?

There's no legal limit on how long a company can remain dormant. Some companies have been dormant for decades while protecting a trading name or waiting for the right opportunity. As long as you continue to file annual accounts and Confirmation Statements, your company can stay dormant indefinitely.

Can I have a bank account for a dormant company?

Yes, you can keep a business bank account open while dormant. However, be aware that any interest earned may trigger Corporation Tax obligations. Many dormant company directors choose to close the bank account or keep a zero balance to avoid this complication.

Do I need an accountant for a dormant company?

No, you don't need an accountant. Dormant company accounts are simple enough that most directors can prepare and file them directly through Companies House's WebFiling service. However, if you want peace of mind or prefer not to handle it yourself, many accountants offer dormant company services for £50-£150 per year.

What if my company was dormant but then I made one transaction?

One significant transaction breaks dormancy for that accounting period. You'll need to file full accounts (not dormant accounts) and a Corporation Tax return covering that transaction. Your company can then return to dormancy for the following period if there are no further transactions.

Can a dormant company be struck off automatically?

Yes. If you fail to file annual accounts or the Confirmation Statement, Companies House can start compulsory strike-off proceedings. They'll send warning letters first, giving you a chance to catch up with filings. If you don't respond, your company will be dissolved.

Do I pay Corporation Tax on a dormant company?

No Corporation Tax is payable if your company has had no income or chargeable gains. However, if your dormant company receives any income (such as bank interest), you may have a Corporation Tax liability on that amount. That's why many dormant companies keep their bank accounts empty or closed.

Can I claim my dormant company was dormant if I forgot to file?

No. Dormancy is about activity, not about whether you filed. If you failed to file accounts because you simply forgot, your company may be subject to late filing penalties. Dormancy doesn't excuse late filing it just simplifies what you need to file.

How do I check if my company is registered as dormant with HMRC?

You can check your company's status by logging into your HMRC business tax account through the Government Gateway. Alternatively, call the Corporation Tax helpline on 0300 200 3410. They can confirm whether your company is marked as dormant in their records.

Can a dormant company own assets?

Yes, a dormant company can own assets such as property, intellectual property, or shares in other companies. However, if those assets generate income (rent, royalties, dividends), your company may no longer be dormant for tax purposes and you'll need to file Corporation Tax returns.

What's the difference between dormant and non-trading?

These terms are often used interchangeably, but there's a subtle difference. "Dormant" is the Companies House term meaning no significant accounting transactions. "Non-trading" typically means the company isn't actively buying and selling goods or services, but might still have some financial activity. For practical purposes, if your company has no transactions at all, it's both dormant and non-trading.

Managing Dormancy with AccountsOS

Even dormant companies have deadlines to track. AccountsOS helps you stay compliant with:

Deadline alerts: Never miss your annual accounts or Confirmation Statement deadline with automated reminders well in advance of due dates.

Document storage: Keep all your dormant company filings organised and accessible, building a clear audit trail if you ever need it.

Reactivation ready: When you decide to start trading again, AccountsOS makes it easy to switch from dormant to active bookkeeping, with all your company information already in place.

Plain English guidance: Not sure whether something counts as a significant transaction? Ask AccountsOS and get a clear answer based on Companies House rules.

Whether you're keeping a company dormant while you plan your next move, or managing multiple dormant companies to protect trading names, AccountsOS simplifies the compliance burden so you can focus on your next opportunity.