Strike off, MVL or dormant: the decision at a glance
When you move abroad and your UK limited company has no obvious future, you have three realistic options: strike it off, wind it up through a Members Voluntary Liquidation, or leave it dormant. The first two end the company and get the cash out; the third keeps it alive at the cost of annual filings and a decision deferred.
| Decision factor | Strike off (DS01) | MVL | Leave it dormant |
|---|---|---|---|
| Best when | Reserves £25,000 or less | Reserves well above £25,000 | A future restart is realistic |
| Tax on cash out | Capital (CGT) if under the cap | Capital (CGT) at any size | None yet; deferred, not saved |
| BADR at 18% | Yes, if conditions met | Yes, if conditions met | Only if shares go within 3 years of trading stopping |
| Upfront cost | £13 online (£18 paper) | Liquidator's fee (a few thousand pounds) | Nil |
| Ongoing admin | None after dissolution | None after dissolution | Dormant accounts plus £50 confirmation statement yearly |
| Speed | A few months | Several months or more | Immediate |
| Reversibility | Gone (restoration is possible but slow) | Gone | Restart any time |
| Key risk | £25,000 cliff edge; dissolution needed within 2 years | Distribution timing vs your residence dates | Missed filings, registrar strike-off, residence creep if it quietly trades |
Route one: strike off and the £25,000 capital cap
A voluntary strike off is the cheap route: form DS01 with Companies House costs £13 online (£18 on paper) and, if nobody objects to the Gazette notice, the company is dissolved a couple of months later. To apply, the company must not have traded, sold stock or changed its name in the last three months, must not be threatened with liquidation, and must have no creditor arrangements such as a Company Voluntary Arrangement.
Section 1030A of the Corporation Tax Act 2010 treats distributions made in anticipation of the dissolution as capital only if the company has settled its debts and the total does not exceed £25,000. Go over and the entire amount, not just the excess, is taxed as a dividend at 2026/27 rates of 10.75%, 35.75% or 39.35% above the £500 allowance; and if the company is not actually dissolved within two years of the distribution, capital treatment is lost.
So the strike off suits modest pots: £24,000 gets clean capital treatment for £13, while £40,000 is taxed entirely as a dividend. Larger balances point to an MVL.
Route two: MVL, capital treatment at any size
A Members Voluntary Liquidation is a formal winding up available only to a solvent company. The directors sign a declaration of solvency stating that the company can pay its debts, with interest, within no more than 12 months; within five weeks the shareholders pass a winding-up resolution and appoint an authorised insolvency practitioner as liquidator. The liquidator settles the final tax position and pays out what is left as capital, with no £25,000 cap.
The trade-off is cost and time: fees typically run to a few thousand pounds over several months. On a six-figure reserve, the gap between capital treatment at 18% or 24% and dividends at up to 39.35% dwarfs the fee; just above £25,000 the maths is tighter and worth modelling first.
What Business Asset Disposal Relief is worth in 2026/27
Business Asset Disposal Relief (BADR) taxes qualifying gains at 18% for disposals on or after 6 April 2026 (14% in 2025/26), within a £1 million lifetime limit. Without it, gains above the basic rate band pay 24% and the annual exempt amount is £3,000. The relief only helps if the distribution is capital in the first place, which is exactly what the sub-£25,000 strike off or an MVL delivers.
To qualify you generally need, for the two years to disposal, at least 5% of shares and voting rights, an officer or employee role, and a trading company. Once trading stops you can still get the relief only if you sell the shares within three years; park the company longer and the 18% rate is usually gone. Claim via your Self Assessment return.
Leaving it dormant: what you must still do
For Companies House, a company is dormant if it has no significant accounting transactions in the year; filing fees, late filing penalties and the original subscriber shares do not count. It must still file annual accounts and a confirmation statement (£50 online) every year, though small dormant companies file simplified dormant accounts with no audit.
For Corporation Tax, dormant means not trading with no other income. Tell HMRC, file a final return to cessation, and no further CT returns are needed unless HMRC issues a notice. But buying, selling, renting property, advertising, employing someone or earning interest all count as activity, so even bank interest on retained cash ends the dormancy.
Two housekeeping points catch overseas owners: directors must complete Companies House identity verification (compulsory since 18 November 2025, existing directors verifying alongside their next confirmation statement), and the registrar can strike off a non-compliant company, anything left inside passing to the Crown as bona vacantia.
Dormancy genuinely wins when a restart is a plan rather than a maybe, such as a planned return to UK contracting: you keep the company number, name and history for around £50 a year plus accounts; otherwise the three-year BADR window should weigh heavily.
The residence trap if the company stays active
A truly dormant company poses little cross-border risk; the danger is the half-measure where you keep the odd invoice flowing from your new home. A UK-incorporated company is always UK tax resident, but if its central management and control sits with a director abroad, your new country may treat it as resident there too, and your activity can create a taxable permanent establishment. Treaty tie-breakers now settle dual residence by mutual agreement rather than automatically, so design this out; see running a UK company from abroad.
Extraction changes too: UK directorship fees generally stay within UK PAYE, while dividends carry no UK withholding and can often reach a non-resident director with little or no UK tax, though your new country will usually tax them. Horizon advises on the UK side; for local filings in your destination country we coordinate with a trusted adviser there.
Timing the closure around your departure
Two anti-avoidance rules can override a sensible plan. First, temporary non-residence: distributions from your own close company received while away five years or fewer can be taxed in the year you return, and for returns to the UK on or after 6 April 2026 that applies whether the profits arose before or after you left. Post-departure payouts only work cleanly if the move lasts more than five complete tax years; see our temporary non-residence guide.
Second, the Targeted Anti-Avoidance Rule (TAAR): take the reserves as capital on a winding up and, if within two years you or someone connected with you carries on the same or a similar trade with a tax advantage as a main purpose, the distribution can be re-taxed as a dividend. The rule does not stop at the border: closing a UK consultancy and starting a similar one abroad within two years can still trigger it.
For many leavers the cleanest sequence is to close and distribute while still UK resident, lock in the 18% BADR rate, and depart with a known tax cost. Map the dates against the statutory residence test with our SRT calculator and the relocation planner.
How to decide
Five questions settle most cases:
- Will you genuinely trade through this company again within two to three years? If yes, dormancy earns its keep; if it is only a maybe, remember the three-year BADR window.
- How much is left after final taxes? £25,000 or less points to a strike off; comfortably more points to an MVL.
- How long will you be away? Five complete tax years or fewer means a post-departure distribution risks tax on your return; close before you go.
- Might you do similar work abroad within two years? If so, check the TAAR before any capital distribution.
- Will your destination country tax the payout? We handle the UK side and bring in a local adviser for the foreign filings.
If the answers point in different directions, that is normal: this is a sequencing problem, and the order of departure, distribution and dissolution dates usually matters more than the route. Fix it on paper before you sign a DS01 or instruct a liquidator.
