A dormant company is a UK limited company that has had no significant accounting transactions during an accounting period. Under Companies Act 2006 section 1169, “significant” excludes a small list of permitted transactions (filing fees, share-issue receipts at incorporation, late filing penalties). Dormant companies still must file annual accounts (called dormant accounts, free) and a confirmation statement with Companies House. The HMRC dormant test is different — it focuses on whether the company has any Corporation Tax liability.
This guide explains the definition, the difference between Companies House dormant and HMRC dormant, why people use dormant companies, the filing requirements, and how to come out of dormancy.
The definition
Companies Act 2006 section 1169 defines a dormant company as one that has had no “significant accounting transactions” during the accounting period.
Permitted transactions that do not count as significant:
- Payment of fees to Companies House (incorporation, confirmation statement, change-of-name fees)
- Receipt of payment for shares allotted at incorporation
- Late filing penalties paid to Companies House
Any other transaction — paying suppliers, receiving customer payments, paying staff, drawing director salaries, even paying a small amount of bank charges — counts as significant and breaks dormant status.
In practice, a dormant company has effectively no bank-account activity beyond the permitted-transaction list. Many dormant companies do not even have a business bank account, with the only activity being on the directors’ or shareholders’ personal accounts (which is fine because it does not pass through the company).
Dormant for Companies House vs HMRC
This is the most-misunderstood point about dormant status: the two definitions are different and being dormant for one does not automatically mean dormant for the other.
HMRC dormant
HMRC treats a company as dormant for Corporation Tax if it is “not active” — broadly, not carrying on any business activity, trade, or income generation. Companies that are HMRC-dormant don’t need to file a Corporation Tax return until they become active again.
A company can be HMRC-dormant if:
- It is not actively trading
- It has no investment income (rental income, interest, dividends received)
- It is not generating any profit or chargeable income
Companies House dormant
A company that is dormant for Companies House purposes (no significant accounting transactions per CA 2006 s.1169) must still file:
- Annual accounts in the form of dormant company accounts (Form AA02 or equivalent)
- A confirmation statement annually
Note: a company can be HMRC-dormant but not Companies House-dormant. For example, a company that earns rental income is HMRC-active (rental income is taxable) but might still have minimal “significant accounting transactions” if you take a strict view — though in practice rental receipts would normally count.
The safer reading is to check both tests separately. A company can be Companies House-dormant while still being HMRC-active, or vice versa.
Why people use dormant companies
Five common reasons:
Holding a name
You can incorporate a company in a chosen name and let it sit dormant until you are ready to trade. This stops anyone else registering the same name. A dormant company costs effectively £50 a year (the confirmation statement fee from Feb 2026) plus minimal accountant time.
Pre-launch entity
Founders incorporate before they are ready to trade — perhaps to lock in a name, secure a domain, or position for an early funding round. The company stays dormant until activities begin.
Holding company in a group structure
A parent company may be dormant for accounting transaction purposes if its only activity is holding shares in a trading subsidiary. The subsidiary is active; the parent is dormant. Many UK group structures work this way.
Shelf companies
Formation agents incorporate companies in advance and sell them as “shelf companies” to buyers who want an entity that has been on the register for some time. Most shelf companies are dormant from incorporation to sale.
Old trading vehicles
Companies that have wound down their trading activity but where directors do not want to dissolve (perhaps to retain the name or the company number for sentimental or contractual reasons) sit dormant. This is rarely the most economic choice — voluntary strike-off is often simpler — but it happens.
Filing requirements when dormant
Companies House filings still apply:
Dormant company accounts
A dormant company files dormant accounts (Form AA02 for very simple cases, or filleted accounts for slightly more complex ones). Filing dormant accounts is free.
The accounts contain a balance sheet only, with minimal narrative confirming dormant status. No directors’ report, no profit and loss, no auditor’s report (audit exemption applies automatically).
Confirmation statement
The annual confirmation statement is still due, with the £50 digital fee from Feb 2026. Dormant status does not exempt the company from this obligation.
Corporation Tax
If the company is HMRC-dormant (not active), HMRC may agree to waive the requirement for a CT600 Corporation Tax return until the company becomes active again. You write to HMRC notifying dormancy. They confirm they will not expect returns until the company resumes activity.
HMRC notification
When you become dormant, notify HMRC. When you come out of dormancy, notify HMRC within 3 months of resuming activity to register for Corporation Tax.
For wider Companies House filing context, see Companies House filing deadlines UK.
Costs of staying dormant
The annual cost of keeping a dormant company on the register:
- Confirmation statement: £50 digital from Feb 2026
- Dormant accounts: £0 (free)
- Accountant fees: typically £100–£300 per year if using an accountant for compliance (many directors handle dormant filings themselves)
Total: £50–£350 per year. Late filings still attract penalties — a dormant company does not get any penalty exemption for missed deadlines.
If the cost outweighs the benefit, voluntary strike-off (Form DS01) is an alternative, with a £44 fee and Companies House publication of intent to dissolve.
Coming out of dormancy
To resume activity:
- Notify HMRC within 3 months of resuming trading. HMRC reactivates Corporation Tax registration and expects future returns.
- Open a business bank account (if you don’t have one). Most dormant companies don’t keep an active account.
- Register for VAT if turnover exceeds the threshold or you want voluntary registration.
- Set up payroll (PAYE) if you will employ staff.
- Continue the Companies House filing schedule — accounts and confirmation statements continue on the same dates as before, but the next set of accounts will reflect the trading position rather than dormant status.
The first set of post-dormancy accounts is full or abridged accounts, not dormant accounts. The transition from dormant to trading is captured in those accounts.
Key takeaways
- A dormant company has no significant accounting transactions per CA 2006 s.1169
- Permitted transactions: filing fees, share-issue receipts at incorporation, late filing penalties
- HMRC dormant ≠ Companies House dormant — separate tests
- Annual filings still required: dormant accounts (free) and confirmation statement (£50)
- Common uses: holding a name, pre-launch entity, holding company in group structures
- Notify HMRC within 3 months of resuming activity to come out of dormancy
Frequently asked questions
What is a dormant company? A UK limited company that has had no significant accounting transactions during the accounting period, per Companies Act 2006 section 1169. Permitted transactions are limited to filing fees, share-issue receipts at incorporation, and late filing penalties.
Do dormant companies still file accounts? Yes. Dormant companies file dormant accounts (free) and a confirmation statement annually. Dormant status is not an exemption from filing — it is a different format.
Is HMRC dormant the same as Companies House dormant? No. HMRC dormant means no Corporation Tax activity; Companies House dormant means no significant accounting transactions. The tests are different and a company can be one without being the other.
How much does it cost to keep a dormant company? £50 per year for the confirmation statement (from Feb 2026), plus optional accountant fees of £100–£300. Dormant accounts filing is free.
How do I come out of dormancy? Notify HMRC within 3 months of resuming trading activity. Set up bank account, payroll, and VAT registration as needed. Continue the Companies House filing schedule, with the next accounts reflecting the trading position.
Useful resources
GOV.UK — Dormant for Companies House https://www.gov.uk/dormant-company/dormant-for-companies-house
Companies House — File dormant accounts https://find-and-update.company-information.service.gov.uk/guides/accounts/chooser/dormant
HMRC — Dormant companies and Corporation Tax https://www.gov.uk/dormant-company