A dormant company is a limited company that exists on the Companies House register but is not carrying on any business. UK law provides no single definition. Companies House and HMRC each apply their own test, and a company qualifies as dormant for one regulator but not the other.
Companies House calls a company dormant when it records no ‘significant’ accounting transactions in the financial year. HMRC treats a company as dormant for Corporation Tax when it has stopped trading and receives no other income, such as investment income. The two tests work independently, so a company can sit dormant at Companies House while staying live in HMRC’s records, or the reverse.
What Is a Dormant Company?
Dormant company meaning depends on which regulator is asking. Companies House looks at the accounting records. HMRC applies four categories under its dormant-for-Corporation-Tax rules:
- A company that has stopped trading and has no other income, such as investment income
- A new company that has not started trading
- An unincorporated association or club owing less than £100 in Corporation Tax
- A flat management company
Companies use dormant status for practical purposes. A founder reserves a company name before launching. A group holds intellectual property or assets inside a non-trading entity. A residents’ association keeps a flat management company alive to administer a block of flats. In each case the legal entity continues while business activity stops.
Dormant company rules in the UK sit inside this two-regulator structure, and both regulators publish separate guidance on GOV.UK.
What Counts as a Significant Accounting Transaction?
A significant accounting transaction is any transaction that must be entered in the company’s accounting records. Size does not matter. Small items count, and a single transaction ends Companies House dormancy for that financial year.
Three transactions break dormancy in practice:
- Bank charges deducted from a company bank account
- Interest received on a company bank account
- Any trading income paid to the company, including sales, fees and invoices
GOV.UK guidance, verified in August 2026, lists all three. Interest breaks dormancy without any business activity: a bank account left open accrues interest, the interest enters the accounting records, and Companies House dormancy ends. HMRC counts the same interest as ‘other income’, which ends its dormancy test as well.
Three payments do not count as significant accounting transactions:
- Filing fees paid to Companies House
- Penalties for late filing of accounts
- Money paid for a company’s shares when it was incorporated
A company that pays its confirmation statement fee, or a late-filing penalty, keeps its dormant status. Share capital paid in at incorporation also stays outside the test, which protects newly registered companies that have not started trading.
The excluded list stops there. A refund received, a domain renewal paid from the company account, or a director’s expense claim all re-enter the accounting records and break dormancy. Companies that intend to stay dormant keep every incidental cost away from the company account.
What Does a Dormant Company Still Have to File?
A dormant company still files a confirmation statement and dormant company accounts every year, and every director and person with significant control (PSC) must verify their identity with Companies House. Dormant does not mean filing-free.
Confirmation statement. File one every year. The fee is £50 for online or software filing and £110 on paper, and the annual fee falls due only with the first statement in each 12-month payment period, per the Companies House fees table updated on 2 July 2026. Agents handle confirmation statements and registered office filings for dormant companies as standard work.
Dormant company accounts. File annually. Dormant accounts are a simplified balance sheet with notes. The company must also qualify as ‘small’ to file them, and no auditor’s report is required when it does.
Identity verification. Every director and PSC must verify their identity with Companies House. The process is free, one-off and runs through GOV.UK One Login under guidance updated on 1 June 2026. Dormant companies receive no exemption.
HMRC notification. Tell HMRC the company is dormant for Corporation Tax. Without that notification, HMRC keeps expecting Company Tax Returns for a company with nothing to declare. Dormancy at Companies House alone does not stop those expectations; the HMRC notification is separate.
VAT. A company registered for VAT deregisters within 30 days of becoming dormant if it does not intend to trade again. A company planning to restart sends nil VAT returns instead.
PAYE. A company that employs people and does not plan to restart trading this tax year closes its PAYE scheme.
How Do You Make a Company Dormant – and Restart It Later?
Making a company dormant means stopping every significant accounting transaction, then notifying HMRC. Trading stops, final obligations settle, and the annual filings continue. A dormant company stays dormant indefinitely; no time limit applies.
Restarting reverses the position in three steps:
- Tell HMRC that trading has resumed. This re-registers the company for Corporation Tax.
- Skip the Companies House notification. The next non-dormant accounts show the company is active again, and reporting dates with Companies House stay the same.
- Start the Corporation Tax accounting period on the restart day. Business activities, not calendar dates, define that period.
The table below sets out the three deadlines that apply once a dormant company trades again, anchored to the accounting reference date.
| Filing | Deadline |
|---|---|
| Statutory accounts to Companies House | 9 months after the year end |
| Corporation Tax payment | 9 months and 1 day after the year end |
| Company Tax Return with full statutory accounts | 12 months after the year end |
A worked example shows the split. A company with a 30 September accounting reference date that restarts on 1 May files statutory accounts for 1 October to 30 September with Companies House, and a Company Tax Return for 1 May to 30 September with HMRC. The Corporation Tax period starts on 1 May because business activities restarted that day.
Common Questions Answered
How Long Can a Company Stay Dormant?
A dormant company stays dormant indefinitely; no statutory time limit applies. The annual filings continue throughout: the confirmation statement, dormant company accounts and identity verification for each director and PSC. Many companies stay dormant for years to hold a name, intellectual property or assets. Compliance cost is the only constraint, and closing the company by strike-off is the alternative once filings become a burden.
Does a Dormant Company Pay Corporation Tax?
No Corporation Tax is due while the company is dormant for HMRC, provided the company meets HMRC’s test: stopped trading and no other income, such as bank interest. One exception applies: where HMRC has issued a notice to deliver a Company Tax Return, a nil CT600 must still be filed for that period.
Can a Dormant Company Have a Bank Account?
Yes, a dormant company can hold a bank account, and the account is a common trap. Interest the account earns breaks the HMRC test as other income. Bank charges, or any transaction beyond the three excluded payments, break the Companies House test. Many dormant companies keep a basic account purely to separate company funds from personal funds.
What Is the Difference Between Dormant and Non-Trading?
Dormant is a filing-status test; non-trading describes activity. A non-trading company can still receive rent, interest or investment income, and those transactions make it non-dormant for both Companies House and HMRC. Dormant means no significant accounting transactions in the financial year, or no trading plus no other income under HMRC’s test.
How Aqua Accounting Can Help
Keeping a dormant company compliant is routine work for the Aqua Accounting team. A fixed annual fee covers the whole cycle: dormant company accounts prepared and filed on time, confirmation statements submitted before the deadline, and HMRC notified of dormancy so no Company Tax Return is expected. The team also handles VAT deregistration, PAYE scheme closure and Companies House identity verification through its authorised-agent route.
Newcastle companies use dormant status to protect names, hold assets and prepare launches. Each structure carries the same annual obligations, and each breaks dormancy the moment a significant accounting transaction lands. A dormant company stays compliant through filing discipline: one calendar and a single notification to HMRC when trading restarts.
Contact the team to move a Newcastle company into dormancy, or out of it, with no missed filings and no penalties.
Disclaimer:
The information provided in this blog is for general informational purposes only and does not constitute professional advice. While every effort is made to ensure accuracy, Aqua Accounting accepts no responsibility for any actions taken based on this content. You should seek professional advice tailored to your individual circumstances.
Omar Ahmed is an ICAEW Chartered Accountant and the Director of Aqua Accounting, a UK-based accountancy practice providing expert accounting and tax services to individuals, sole traders, and small to medium-sized businesses. As a trusted accountant in Newcastle, he offers expertise in annual accounts, self-assessment tax returns, company accounts, VAT, payroll, bookkeeping, and company formation.
With a strong focus on delivering clear and practical financial advice, Omar helps clients stay compliant while improving their understanding of their finances. Through Aqua Accounting, he works closely with business owners to simplify accounting processes, meet tax obligations, and support informed financial decision-making.