Calculate the costs and tax implications of voluntary strike off (DS01) for a UK limited company. Compare strike off vs MVL based on net assets.
Voluntary strike off is the informal dissolution of a solvent limited company by applying to Companies House to remove it from the register. The director applies using form DS01 (fee: £33 online). Before applying, all company activities must cease, assets distributed, debts paid, bank accounts closed, and HMRC notified. If HMRC objects (e.g., tax returns are outstanding), the application will be suspended.
Strike off is appropriate when: company assets are under £25,000 (anything distributed is treated as a capital distribution, subject to CGT); all trading has genuinely ceased; there are no creditor disputes. MVL is more appropriate when: assets exceed £25,000 (the formal liquidation process maximises tax efficiency with BADR); there are creditors who need formal protection; or the company has complex affairs requiring a licensed insolvency practitioner.
Distributions made during the dissolution of a solvent company are treated as capital receipts for CGT purposes (not income dividends), as long as the company is struck off within 5 years of the final distribution. The CGT annual exempt amount (£3,000 for 2024/25) applies. Business Asset Disposal Relief (10% CGT) may be available if you are a qualifying director/shareholder. For distributions over £25,000, HMRC may challenge the CGT treatment and impose income tax instead.
Before applying: file all outstanding company tax returns and accounts with Companies House and HMRC; pay all corporation tax, VAT, PAYE, and NI; deregister for VAT (if applicable); close all bank accounts; transfer or distribute remaining assets to shareholders; notify HMRC. If any of these are incomplete, HMRC or Companies House may object to the strike off application.
Companies House publishes the dissolution notice in the Gazette. Interested parties (HMRC, creditors, employees) have 2 months to object. If no objections are received, the company is struck off after approximately 3 months total. If HMRC objects (usually because tax returns are outstanding), the process is suspended until the objection is resolved — which can take 6-12 months if returns need filing.