Closing a limited company
Before you close it, is it worth more sold?
If you have decided to stop, this page explains how closing a solvent company actually works — the two routes, the £25,000 rule that catches people out, and what each one costs.
It also asks the question most owners never get round to, because nobody in the process has any reason to raise it.
The two ways to close a solvent company
A solvent limited company can be closed either by voluntary strike off, using form DS01, or through a members' voluntary liquidation. Strike off costs £13 online and suits a company with under £25,000 left to distribute. An MVL costs several thousand pounds and is used where there is more than that, because it preserves capital tax treatment on the whole amount.
Voluntary strike off (form DS01)
You file form DS01 with Companies House. Since 1 February 2026 the fee is £13 online or £18 by post, reduced from £33 and £44. A copy must reach every shareholder, creditor, employee, pension trustee and non-signing director within seven days. Companies House publishes a notice in the Gazette, and if nobody objects the company is struck off, typically two to three months after filing.
It is cheap and simple. The catch is tax.
Members’ voluntary liquidation (MVL)
A licensed insolvency practitioner is appointed, realises the assets, settles everything outstanding and distributes what is left to shareholders. It costs more — usually somewhere between £1,500 and £5,000 in practitioner fees, sometimes more where there are premises or plant to deal with — and takes longer.
What you buy for that is capital treatment on the whole distribution, however large.
The £25,000 rule, and why it is a cliff
Under section 1030A of the Corporation Tax Act 2010, distributions made in anticipation of a strike off are treated as capital — so capital gains tax applies, and Business Asset Disposal Relief may be available at 18% for 2026/27 — but only if the total does not exceed £25,000.
Two things about that limit catch people out.
It applies to the company, not to each shareholder. Three shareholders do not get £25,000 each. The company gets £25,000 in total.
And it is a cliff, not an allowance. Distribute £25,001 and the whole amount is treated as income, not just the pound over. At higher-rate dividend tax that is roughly double the bill on the entire sum.
Which is why an MVL, despite costing a few thousand pounds in fees, is usually the cheaper route for any company with meaningful reserves.
| Strike off (DS01) | Members’ voluntary liquidation | |
|---|---|---|
| Cost | £13 online, £18 by post | £1,500–£5,000+ practitioner fees |
| Timescale | 2–3 months | 3–9 months |
| Capital treatment | Only up to £25,000 in total | Any amount |
| Above the limit | Whole sum taxed as a dividend | Capital treatment preserved |
| Suits | Little left in the company | Real reserves, assets, property |
Figures are for the 2026/27 UK tax year and change often — BADR alone has moved from 10% to 14% to 18% in three years. Take advice from your own accountant before acting. There is also an anti-avoidance rule that can withdraw capital treatment if you carry on a similar trade within two years of winding up.
What closing actually realises
A liquidator sells what can be sold. Plant and machinery at auction value, which is usually a fraction of what it is worth in place and working. Stock at whatever it fetches. Debtors, less whatever cannot be collected. Property, if you own it.
Then the fees come out, and the rest is distributed.
What has no line in that statement
Everything that took you forty years to build and that a liquidator has no mechanism to sell:
Your customers. Not a list of names — the relationships. The people who ring you first because you sorted something out for them in 2009.
Your trading name. Recognised in your sector, on your region’s approved-supplier lists, known to the people who specify work.
Your accreditations and approvals. The ones that took two years and a lot of paperwork, that a competitor would value precisely because they remember how long it took them.
Your workforce. Twelve people who know how your jobs run, several of whom you trained. On a closure they are redundancies. To a buyer they are most of the reason to be interested.
Your order book. Work already won, which simply gets handed back.
None of it appears on a liquidator's statement of affairs. All of it has value to somebody still trading in your sector — which is the whole gap between the two numbers below.
What that difference looks like
Take a fabrication business turning over £7m with adjusted profits of around £900,000, a freehold unit, £600,000 of plant, 30 staff, and an owner of 67 with nobody to take it on.
| Wound up | Sold as a going concern | |
|---|---|---|
| Plant and machinery | Auction value, well below book | Included, valued in use |
| Freehold | Realised | Realised, or retained and let to the buyer |
| Customers, name, approvals | Nothing | A large part of the price |
| Order book | Handed back | Transfers |
| Your 30 staff | Redundant | Employed |
| Rough outcome | Asset value, less fees and redundancy costs | A multiple of profits, plus property — and, if you keep a stake, a share of what it becomes |
The figures depend entirely on the business, and anyone who gives you a number before seeing the accounts is guessing. But the shape is consistent: for a business with staff, premises and repeat customers, a sale is usually worth a multiple of what a liquidation realises. How a buyer arrives at that number is worth understanding before you talk to anybody.
When closing genuinely is the right answer
Sometimes it is, and anyone who tells you otherwise is selling something.
When the business is you. If the work comes because of your relationships, your judgement and your name, and there is no process underneath that somebody else could follow, then there is not much to buy. A buyer would be paying for an introduction to people who want to deal with you.
When the market is going away. If your main customers are shrinking, or the work is being designed out, a buyer sees the same thing you do. Winding up while the company is still comfortably solvent is a good outcome.
When there is nothing underneath you. No supervisor, no estimator, no one who could run a week without you. That business can be improved and sold — but it takes eighteen months of deliberate work, and if you do not want to spend those months, closing cleanly is an honest decision.
When you simply want it over. A sale takes four to six months and involves people going through your accounts. That is a real cost in energy at a point in life when you may not want to spend it. Nobody should talk you out of that.
The one question worth asking first
Would somebody pay more for this than the liquidator will realise?
It costs nothing to find out, it takes about fifteen minutes, and it is the only version of this question you can ask while the answer still matters. Once the DS01 is filed and the Gazette notice has run, the company is gone and so is anything that was only worth something while it was trading.
If the answer is no, you have lost a phone call and you can file with more confidence than you had before. If you would rather see the alternatives first, there are four realistic options and I am only one of them — and the structure I would propose is set out in full, including what it does not offer.
Next step
Fifteen minutes, and nothing goes any further.
I buy owner-managed construction, engineering and manufacturing businesses in the UK and run them. I am a civil engineer and have spent thirty years in delivery — on site, running packages, then business units, most recently as a construction director.
I will tell you plainly if I am not the right buyer, or if closing really is your best option. I would rather do that than waste your time, and you are not the first owner I will have said it to.
Confidential either way. I will not contact your staff, your customers or your suppliers.