by Asim Abbas
11 November 2026 
How to close a limited company: strike-off or MVL?
How to close a limited company: strike-off or MVL?
When you no longer need your limited company, closing it properly protects you and gets the remaining money out in the most tax-efficient way.
- Strike-off suits companies with up to £25,000 left
- An MVL lets larger sums be taxed as capital
- BADR rate is 18% from 6 April 2026
- Anti-avoidance rules apply if you start again
The two main routes for solvent companies are voluntary strike-off and a Members’ Voluntary Liquidation. The right choice depends mainly on how much is left in the company.
This guide compares the options and explains how Business Asset Disposal Relief applies from April 2026.
Before you close
- Collect money owed to the company and pay all creditors
- File final accounts and a final CT600
- Close the payroll and deregister for VAT
- Settle your director’s loan account
- Decide how to take out the remaining cash
Voluntary strike-off (DS01)
You apply to Companies House to remove the company from the register. It is cheap and simple. Distributions made before striking off of up to £25,000 in total can be treated as capital rather than income. Above that, the whole amount is taxed as a dividend.
Members’ Voluntary Liquidation
A licensed insolvency practitioner winds the company up and distributes its assets. Distributions are treated as capital, whatever the amount, so they can qualify for Business Asset Disposal Relief. An MVL has professional fees, so it usually makes sense when retained reserves are well above £25,000.
Capital gains tax calculator
Estimate CGT on a capital distribution.
| Strike-off | MVL | |
|---|---|---|
| Best for | Up to £25,000 left | Larger reserves |
| Tax treatment | Capital up to £25,000 | Capital, no limit |
| BADR available | Possibly, up to the limit | Yes, if qualifying |
| Cost | Low | Insolvency practitioner fees |
Business Asset Disposal Relief
BADR reduces Capital Gains Tax on qualifying gains up to a £1 million lifetime limit. The rate was 14% in 2025/26 and is 18% from 6 April 2026. You generally need to have held at least 5% of the shares and been a director or employee for two years.
Ruth closes her consultancy company through an MVL with £150,000 of reserves left after costs. With BADR at 18%, CGT is about £26,460 after her £3,000 annual exemption. Taking the same amount as dividends would cost far more, much of it at 35.75%.
Fixed-fee accountancy support
Transparent monthly packages for sole traders, landlords and limited companies. Fixed fees agreed upfront, VAT included.
Get a fixed-fee quoteCall 0161 531 4179The anti-avoidance rule
If you receive a capital distribution on winding up and then carry on a similar trade within two years, through a new company, partnership or as a sole trader, HMRC can treat the distribution as income. This targets phoenixism, so take advice if you plan to keep working in the same field.
If the company can’t pay its debts
An insolvent company can’t be struck off or put into an MVL. A Creditors’ Voluntary Liquidation is usually needed, and directors should take advice early to avoid personal liability.
See Companies House guidance on closing a limited company, our capital gains tax service, or speak to our limited company accountants.
What should I do next?
Cash and assets after debts.
Strike-off or MVL.
Accounts, CT600, payroll, VAT.
Frequently Asked Questions
How much can I take out on strike-off as capital?
Up to £25,000 in total. Above that, the whole distribution is taxed as income.
When is an MVL worth it?
Usually when reserves are well above £25,000, so BADR savings outweigh the fees.
What is the BADR rate from April 2026?
18%, up from 14% in 2025/26.
Can I start a new company after closing one?
Yes, but if you carry on a similar trade within two years, HMRC may tax the distribution as income.
How long does strike-off take?
Usually around three months after the application is published in the Gazette.
Need help with this? Wingate Accountants offers fixed-fee online accountancy support across the UK. Call 0161 531 4179 or request a quote at wingateaccountants.co.uk.
About the Author
Stephen Reynold
I’m Stephen Reynold, an accountant at Wingate Accountants. I work with sole traders and small companies, turning tax rules into clear, practical next steps.
