How Much Does It Cost To Close A Limited Company?
One of the most common questions when planning to shut down a business is – how much does it cost to close a limited company? UK companies have several options available to them, depending on whether they are solvent or not.
In this guide, we run through the approximate cost considerations from voluntarily striking off a limited company to the cost of a liquidation and everything in between.
How much does it cost to close a limited company (UK)?
If you want to close a company that has stopped trading and paid off all its debts then there is a quick, straightforward and cheap solution.
You can voluntarily strike off your limited company from the Companies House register for a very small fee.
The government website lets you apply to strike off and dissolve a company online for £33.
Alternatively, you can do it with a DS01 form for £44. To close a company that never traded, use a DS01 form too.
After submitting your application, the Gazette publishes your request. If nobody objects, your company will cease to be on the register after two months.
This inexpensive choice is an option if your company has not:
- Traded or sold off stock in the last three months
- Been threatened with liquidation
- Any agreements with creditors, such as a Company Voluntary Arrangement (CVA)
- Changed its name in the last three months
Find out more about the process involved when closing a limited company. We have also recently explained what happens when an active proposal to strike off is suspended.
How much does a Members’ Voluntary Liquidation (MVL) cost?
If your company is solvent but doesn’t meet the criteria to be struck off, you can liquidate it via a MVL. It is a formal way to close a solvent company with significant assets.
MVLs involve closing down a company which is solvent – able to settle its liabilities entirely within 12 months, in other words. This can be for a variety of reasons, such as directors or shareholders looking to retire or realise the assets of a company in a tax-efficient manner.
MVLs can be the cheapest way to liquidate a company. Tax-efficient when subject to Capital Gains Tax rather than income tax, you may also be eligible for Business Asset Disposal Relief which could lower the tax rate to 14% from 6 April 2025 (previously 10%).
The main cost of an MVL is the liquidator’s fee, which is based on the size and nature of the MVL. There are also small, additional costs known as disbursements which cover necessary expenses such as posting legal notices – find out more about insolvency practitioner fees.
How much does a Creditors’ Voluntary Liquidation cost?
When an insolvent company needs to close, because it cannot pay its debts to creditors when they fall due, a Creditors’ Voluntary Liquidation (CVL) is an option.
It is typically a much better solution compared to a compulsory liquidation – more on this shortly.
Costs could reach between £4,000 and £6,000 plus VAT but if the company has complex finances or ongoing legal matters, fees will be higher – find out more about the different types of liquidations.
Sales of company assets usually cover these costs, though directors might have to pay if the proceeds fall short. In some cases, director redundancy pay can help with the expense.
How much does compulsory liquidation cost?
Compulsory liquidation involves a court process and begins when a creditor submits a winding-up petition, if the company in question owes them at least £750 and has an unpaid statutory demand.
The petition costs between £400 and £800, with a court deposit of £1,600 and a £280 filing fee. If the court appoints a liquidator, account for their fees – again, for more details, find out more about the different types of liquidations.
Other fees can include:
- Legal fees for the solicitor
- £11,000 in official receiver fees as soon as the company enters liquidation (payable from company assets)
- 15% of any assets sold or realised from company assets go to the official receiver
While creditors pay these costs upfront, they aim to recover them from the insolvent company’s assets if funds allow.
Final thoughts: How much does it cost to liquidate a company?
CVLs are both professional and voluntary, providing the company directors with a greater variety of options than if they were entering compulsory liquidation.
With a CVL, creditors can submit their claims in an orderly way and the process becomes controlled and manageable. Find out more about what creditors’ rights are during insolvency proceedings.
Alternatively, with a CVA, insolvency practitioners put together a formal repayment plan while the company continues to trade. This eases the pressure from creditors and can help the business avoid liquidation.
Whether you need business recovery experts or just good financial advice, Hudson Weir is here to help – for more information, please don’t hesitate to contact us.
