How to Close a UK Limited Company

In this short company guide we'll look at how to close a UK Limited Company. When closing your limited company there are a number of steps you must take before starting the shutdown process.

One of the main reasons for closing down a ltd company is that it has ceased trading. It's the most common example but there are other reasons.

Before you can close your company, a final set of accounts must be completed and submitted to HMRC (if a corporation tax return is expected) and Companies House. If your company accounts have just been done then this step could be omitted. That is as long as you've prepared everything they way you'd like such as final dividend distributions and working out the asset value at the year-end date.

Fortunately you can change the company's accounting period to submit the final accounts. Just remember you can only extend a period once every 5 years.

When the accounts are finalised and the assets have been valued, your company will then need to distribute those assets to the shareholders. In most cases, the majority of the company's assets (as a single director/employee company) will just be the cash left in the business account after tax.

Remember if the total assets are over £25,000, you'll need to complete a Members Voluntary Liquidation. This is a service you must pay for when distributions go over £25k. If it's below that then you can apply to 'strike-off' the company with Companies House.

A very important step to remember is that you must take all the remaining funds from the business account before apply to strike-off the company with Companies House. The bank account will be frozen once they start processing your application and any leftover funds will be kept under 'Bona Vacantia' or 'vacant goods'.

In the case that Companies House applies for a mandatory company strike-off due to missing accounts or Confirmation Statements, all company funds will be kept under the 'Bona Vacantia' rules. The company would need to be re-opened which can take a lot of time and could be costly. Before doing this you'll need to assess if it's worth re-opening the company to retrieve your money. An accountant can help you determine this but they will likely need to produce a set of accounts for the company before doing so.

We hope you enjoyed our video on how to close a UK limited company. It's always recommended to get legal or accounting advice whenever closing a company to ensure it's done correctly.