Dormant companies
The dormant company meaning depends entirely on who is asking. Companies House and HMRC use two different tests, and a company can sit on the right side of one and the wrong side of the other without anyone noticing until a penalty arrives. Company dormant meaning, put plainly: on the register, but not doing anything.
Updated 13 September 2026 · Tax year 2026/27
Two definitions, not one #
This is the whole of the confusion, so it is worth putting side by side before anything else.
| Companies House | HMRC | |
|---|---|---|
| The test | No significant accounting transactions in the financial year | Not active for Corporation Tax: no trading and no other income |
| What it affects | The accounts you file | Corporation Tax and the Company Tax Return |
| How it starts | Automatically, by having no such transactions | You tell HMRC, or HMRC writes to you |
| Still must file | Confirmation statement and accounts | Nothing, once HMRC accepts it |
| Telling them you restarted | Not required | Required |
The Companies House definition #
The dormant company definition used by Companies House is a single test: no significant accounting transactions during the financial year. A significant accounting transaction is one the company would have to record in its accounting records.
Three things are specifically excluded, so none of them breaks dormancy:
- Filing fees paid to Companies House
- Penalties for filing accounts late
- Money paid for shares when the company was incorporated
That last one matters at the start. Paying for your shares when the company is incorporated does not stop a brand new company being dormant from day one, which is what makes it possible to hold a company name without trading.
The HMRC definition #
HMRC asks a different question: is the company active for Corporation Tax? A company is dormant for Corporation Tax if it has stopped trading and has no other income.
Trading here is wider than the ordinary sense of the word. All of these count as activity:
- Buying or selling anything
- Renting out property
- Advertising
- Employing someone
- Receiving bank interest
Bank interest is the one that catches dormant companies out. A company sitting on a balance in an interest-bearing account is receiving income, and is therefore active for Corporation Tax however little it does otherwise. Moving the balance to a non-interest account solves it.
HMRC also treats two other cases as dormant: a new limited company that has not started trading yet, and an unincorporated association or club owing less than £100.00 in Corporation Tax. A flat management company is treated as dormant too.
What a dormant company still files #
Dormant does not mean dormant paperwork. Every year, Companies House still wants:
- A confirmation statement, every year
- Annual accounts, which can be dormant accounts if the company also qualifies as small
Dormant accounts are short. If the company also qualifies as small it can file the dormant version, which needs no auditor report and in most cases amounts to a balance sheet showing almost nothing.
How to make a company dormant #
There is no dormant company registration to complete, which is why searching for one turns up so little. How to make company dormant is a question with a slightly odd answer: it is a sequence of things you stop doing, plus one letter to HMRC. How to make company dormant uk side is no different, because both Companies House and HMRC cover the whole UK. The steps are:
- Stop trading, and stop any other income, including bank interest
- Tell HMRC the company is dormant for Corporation Tax
- File any outstanding returns up to the date it became dormant, including the final Company Tax Return for the active period
- Close the PAYE scheme if you had one, and deregister for VAT if you were registered
- Keep filing the confirmation statement and accounts each year
If you have previously filed Company Tax Returns, HMRC may ask for one more covering the period up to dormancy. After that, no Corporation Tax and no return unless HMRC says otherwise.
Dormant company accounts, and the tax return #
Dormant company accounts filing is the obligation people are most often surprised by, so it is worth being precise about what is and is not required.
| Required? | |
|---|---|
| Dormant accounts to Companies House | Yes, every year |
| Confirmation statement to Companies House | Yes, every year |
| Dormant company tax return to HMRC | No, once HMRC has accepted dormancy |
| Corporation Tax payment | No |
| Auditor's report | No, if the company also qualifies as small |
A dormant company accounts example is shorter than most people expect: a balance sheet showing called up share capital and little else, with the statutory statements beneath it. There is no profit and loss account, because there was no profit or loss.
The dormant company tax return is the one to get clear. Before HMRC accepts dormancy you may still owe a Company Tax Return covering the active period. After it accepts, you file none at all unless HMRC asks.
Starting up again #
The two bodies differ here too, and this is where companies quietly fall out of compliance.
Companies House needs no notice. The next set of non-dormant accounts you file shows the company is trading again.
HMRC does need telling. The company has become active for Corporation Tax, and that restarts the return and payment cycle described in Corporation Tax deadlines. If you registered for PAYE or VAT before going dormant, check whether you need those again as well.
Buying a dormant company #
Dormant companies are sometimes bought and sold, usually for an aged registration date or a particular name. Treat that with care.
You inherit the company's whole history, including any liability that was never settled and any filing default on its public record. An aged company carries no tax advantage of its own. Incorporating a new company costs a fraction of what most dormant companies are advertised for, and starts with a clean record.
Dormant, or closed? #
Dormancy is a pause. If you are not coming back, closing the company ends the filing obligation entirely rather than leaving two returns a year running indefinitely.
The trade is simple: dormancy keeps the name and the registration for the cost of two filings a year; strike off ends everything but means incorporating again from scratch if you change your mind. Both routes, the £13.00 fee and the £25,000.00 rule that decides how the last of the cash is taxed, are in closing a limited company.
Common questions #
What does dormant company mean?
It depends who is asking. For Companies House a company is dormant if it has had no significant accounting transactions during the financial year. For HMRC it is dormant if it is not active for Corporation Tax, meaning it is not trading and has no other income. The two tests are different and a company can meet one but not the other.
What is the definition of a dormant company for Companies House?
No significant accounting transactions in the financial year. Filing fees paid to Companies House, penalties for filing accounts late, and money paid for shares on incorporation are specifically excluded, so none of those breaks dormancy.
Does a dormant company still have to file anything?
Yes. A confirmation statement every year, and annual accounts. If the company also qualifies as small it can file dormant accounts, which are much shorter and need no auditor report. Missing these still brings late filing penalties.
Does a dormant company pay Corporation Tax?
No. Once HMRC accepts the company is dormant for Corporation Tax you do not pay Corporation Tax and do not file a Company Tax Return, unless HMRC asks for one. That is separate from the Companies House filings, which continue.
What counts as trading for the HMRC test?
More than people expect. Buying or selling anything, renting out property, advertising, employing someone, and receiving bank interest all count as activity. A company with nothing but an interest-bearing account is not dormant for Corporation Tax.
How do I register a company as dormant?
There is no dormant company registration as such. You incorporate or keep an ordinary company and tell HMRC it is dormant for Corporation Tax. At Companies House, dormancy is not registered either: it shows in the accounts you file.
Do I need to tell Companies House when I start trading again?
No. The next set of non-dormant accounts you file shows the company is trading. HMRC is different: you must tell HMRC the company is active again.
Should I make my company dormant or close it?
Dormant keeps the company and its name on the register with two filings a year and no Corporation Tax. Closing it ends the filings entirely but means incorporating again if you want it back. Dormant suits a pause; strike off suits a decision.