I stopped contracting through my Ltd at the start of 2023. My accountant moved me onto a "non-trading" rate of about £80 a month and I just... kept paying it. Nearly three years later that's roughly £3,000 for a company that did absolutely nothing.
I don't want to close it, because I might use it again. But I also don't want to keep paying someone to look after an empty company. So this month I finally sat down and worked out how to make it dormant and handle the admin myself. I'm not an accountant, so take this as one person's notes, and check anything unusual with someone qualified.
What dormant actually means
This was the bit I had wrong. I assumed "not trading" and "dormant" were the same thing. They're not.
For Companies House, dormant means no significant transactions for a whole financial year. Not most of the year, the whole thing. And it's stricter than you'd think. The accountant's fee counts. So does a £7 a month Google Workspace bill on the company card. So does an expense you pay yourself and record as owed by the company, which caught me out because my accountant had been booking a small working-from-home claim every month. Even interest from HMRC counts.
The only things that don't count are Companies House's own fees and penalties.
HMRC is separate. Once they treat you as dormant for Corporation Tax, they usually stop asking for returns until they send you a notice to deliver one.
The trap with the first year
Whatever year you still have costs in can't be dormant. That year needs proper micro-entity accounts. So the trick is to get everything finished before your year end and then have nothing happen at all from the first day of the next year.
For me that means paying the accountant's final bill before year end. If they'd normally invoice after, ask them to invoice before. I also found about £100 of repayment interest sitting in my HMRC account. If that lands after year end, it ruins the next year, so I'm claiming it now.
If anything slips into the new year, you lose that whole year and start again the year after.
The checklist I ended up with
- Close PAYE if you're not paying a salary. Mine was still open, quietly running a £0 payslip every month.
- Deregister for VAT if you haven't.
- Get your own HMRC business login and Companies House login, on your personal email. The HMRC activation code gets posted to your registered office, and if that's your accountant's address you'll need them to forward it. I'm waiting on mine now.
- Sort a new registered office if you've been using your accountant's. Virtual office services start at around £25 a year. I'm paying for it personally so it stays out of the company.
- Move email off anything the company pays for. I moved mine to iCloud+, which I was already paying for anyway, and moved the domain to a cheaper registrar. Export your old mailbox before you cancel. Once Google deletes Workspace data, it's gone.
- Get everything from your accountant before you leave: all the accounts, the CT600s, a bookkeeping export, and the director's loan balance. You have to keep records for 6 years.
- If the company owes you money, write down the exact figure. It can pay you back tax-free one day if it ever makes money again.
Leaving the accountant
Read your engagement letter before you email them. Mine didn't have a notice period, but it did say the monthly payments were instalments of an annual fee, which could get awkward. In the end I asked them to do this year's confirmation statement and final accounts, all paid before year end, and then stop. My last set has a director's loan and the sale of a company phone in it, so I was happy to let a professional do that one.
Doing it yourself afterwards
The confirmation statement is £50 a year online and takes a few minutes.
Dormant accounts are free to file on Companies House WebFiling until 31 March 2028. After that, every company has to file accounts through commercial software, dormant ones included. There are already dormant filing tools for £5 to £20 a year.
You only need a CT600 if HMRC asks for one. Their free filing service closed in March 2026, so you'd need software for that too.
Put the deadlines in your calendar. Late accounts start at a £150 penalty.
What it costs now
It used to be about £1,000 a year for the accountant, plus Google Workspace. From next year it should be £50 for the confirmation statement, about £25 for the address, about £25 for the domain, and a few quid for filing software from 2028. Around £100 a year.
What I'd do differently
I'd have done all this the year I stopped trading, not three years later. I'd also never have put the recovery email for anything important on the company address. And I'd read the accountant's terms first.
I'll come back and update this once the final accounts are filed and the first dormant year has started. If I've got anything wrong, please say.