The cheapest way to close a limited company depends on whether it can pay its debts.
For a solvent company with straightforward affairs, voluntary strike off is usually the lowest-cost option. It costs £13 online or £18 using a paper application.
If the company is insolvent and cannot pay its debts, a Creditors’ Voluntary Liquidation, or CVL, is normally the most appropriate voluntary closure route. Professional fees apply, but the cost may be paid using company assets where sufficient funds are available.
A solvent company with substantial retained profits may find that a Members’ Voluntary Liquidation, or MVL, produces a better overall financial outcome than strike off.
💡 Quick Answer
Voluntary strike off is usually the cheapest way to close a solvent company whose debts, taxes and assets have been dealt with. If the company cannot pay its debts, a Creditors’ Voluntary Liquidation is normally the safest voluntary closure route. For a solvent company with significant retained profits, an MVL may be more cost-effective overall.
Is Closing a Company the Same as Liquidating It?
No. Strike off and liquidation are different closure processes.
Company strike off, also known as dissolution, is a relatively simple procedure used to remove an eligible company from the Companies House register.
Liquidation is a formal process managed by a licensed insolvency practitioner or, in compulsory cases, the Official Receiver.
The principal types of company liquidation are:
- Creditors’ Voluntary Liquidation for an insolvent company
- Members’ Voluntary Liquidation for a solvent company
- Compulsory liquidation following a court winding-up order
This distinction matters because strike off may be the cheapest way to close a company, but it is not normally suitable for formally dealing with an insolvent company and its creditors.
Cheapest Company Closure Options at a Glance
| Company position | Likely option | Typical cost position |
|---|---|---|
| Solvent, inactive and straightforward | Voluntary strike off | £13 online or £18 by paper |
| Solvent with significant retained profits or assets | Members’ Voluntary Liquidation | Professional fees apply, but the tax treatment may provide a better overall outcome |
| Insolvent and unable to pay debts | Creditors’ Voluntary Liquidation | Professional fees apply and may be funded from company assets |
| Forced into liquidation by a creditor | Compulsory liquidation | Court and petition costs apply |
The cheapest headline fee is not always the cheapest overall result. Choosing an unsuitable process can cause creditor objections, delays and additional expense.
What Is the Cheapest Way to Close a Solvent Company?
Voluntary strike off is usually the cheapest option for a solvent company whose affairs are straightforward.
The Companies House application fee is currently:
- £13 online
- £18 using a paper DS01 form
Before applying, the directors should normally:
- Stop trading
- Deal with company debts
- Complete outstanding tax affairs
- Pay employees and final wages
- Distribute or transfer company assets
- Close the company bank account
- Notify relevant interested parties
Strike off is most appropriate where the company is no longer required and there are no significant unresolved matters.
It is not a formal liquidation process and does not appoint an insolvency practitioner to deal with company assets or creditors.
Can You Strike Off a Company With Debts?
A company with debts may submit a strike-off application, but creditors can object and prevent the company from being dissolved.
Potential objectors include:
- HMRC
- Banks and finance providers
- Suppliers
- Landlords
- Employees
- Local authorities
This means strike off should not be treated as a cheap way to avoid unpaid liabilities.
If an objection is accepted, the strike-off process may be suspended until the underlying issue has been resolved.
A creditor may also be able to apply to restore a dissolved company to the register so that recovery or legal action can continue.
Where the company is insolvent and cannot pay what it owes, directors should consider a formal insolvency procedure instead.
What Is the Cheapest Way to Close an Insolvent Company?
For an insolvent company, a Creditors’ Voluntary Liquidation is usually the most appropriate voluntary closure route.
A CVL costs more than strike off because a licensed insolvency practitioner must be appointed to:
- Prepare the liquidation
- Take control of company assets
- Communicate with creditors
- Deal with employees
- Review company records
- Agree creditor claims
- Complete statutory reports
- Bring the company to an orderly closure
The professional fee will depend on the size and complexity of the company.
The cost is normally paid from available company assets. Where the company does not have enough cash or assets, a contribution from the directors or shareholders may be required.
For a full fee breakdown, read our guide to the cost of liquidating a company.
What If the Company Has No Money for Liquidation?
A lack of cash does not automatically mean that a CVL is impossible.
Possible funding sources may include:
- Money remaining in the company bank account
- Proceeds from selling company assets
- Outstanding customer payments
- A director or shareholder contribution
- Staged payments agreed with the insolvency practice
- An eligible director redundancy payment
Directors should obtain advice before selling or transferring company assets.
When a company is insolvent, its directors must prioritise the interests of creditors. Assets should be properly valued and transactions clearly recorded.
Moving assets to another company or connected person for less than their true value may later be investigated by the liquidator.
Can Director Redundancy Help Pay for Liquidation?
Some directors may qualify for statutory redundancy and other employment-related payments after their company enters formal insolvency.
However, eligibility is not automatic simply because someone was registered as a director.
The director must also have genuinely worked as an employee of the company. Evidence may include:
- An employment contract
- PAYE records
- Regular salary payments
- Defined working hours
- Day-to-day duties
- Continuous service
Statutory redundancy pay normally requires at least two years of continuous employment.
Each claim is assessed individually, so directors should not assume that a redundancy payment will definitely be available to fund the liquidation.
Is an MVL Cheaper Than Strike Off?
An MVL costs more upfront than company strike off because a licensed insolvency practitioner must be appointed.
However, an MVL may provide a better overall result where a solvent company has substantial retained profits or assets to distribute.
An MVL may be worth considering where:
- The company can pay all its debts
- Significant cash or assets remain
- The shareholders want to close the business
- Tax-efficient distributions are important
The directors must believe that the company can pay its debts, including interest, within 12 months of entering the MVL.
Although professional fees apply, the potential tax treatment of shareholder distributions may outweigh the additional cost. Independent tax advice should be taken before choosing between strike off and an MVL.
Is Compulsory Liquidation a Cheap Alternative?
No. Directors should not deliberately wait for HMRC or another creditor to force the company into compulsory liquidation simply to avoid paying for a CVL.
Compulsory liquidation involves court proceedings, and petition costs apply.
Directors also lose control over:
- The timing of the liquidation
- The choice of liquidator
- Communication with employees
- Preparation for the closure
- The way suppliers and customers are informed
Following a winding-up order, the Official Receiver will normally become the company’s first liquidator and investigate its affairs and the conduct of its directors.
Where liquidation is unavoidable, arranging a CVL voluntarily usually provides more time to prepare and gives directors greater control over the appointment process.
How Can Directors Keep Liquidation Costs Down?
Directors can help avoid unnecessary costs and delays by preparing the company’s information properly.
You should:
- Keep accounting records up to date
- Provide bank statements promptly
- Prepare an accurate creditor list
- Identify all company assets
- Supply payroll and employee records
- Explain unusual or significant transactions
- Disclose any overdrawn director’s loan account
- Preserve emails and electronic records
- Respond promptly to the insolvency practitioner
Incomplete records can increase the amount of work required and may lead to additional fees.
Directors should also seek advice before creditor action escalates. Waiting until a winding-up petition has been presented can reduce the options available and increase legal costs.
Which Closure Option Is Right for Your Company?
Strike off may be suitable where:
- The company is solvent
- It has stopped trading
- Debts and taxes have been resolved
- Employees have been dealt with
- Assets have been distributed
- There are no significant creditor disputes
An MVL may be suitable where:
- The company is solvent
- Significant retained profits or assets remain
- Shareholders want to extract company value
- The potential tax treatment justifies the professional fee
A CVL may be suitable where:
- The company cannot pay its debts
- HMRC or suppliers are applying pressure
- Strike off is likely to be challenged
- Employees are owed money
- Assets need to be dealt with formally
- Directors want an orderly voluntary closure
Professional advice should be taken urgently where the company has received a statutory demand or winding-up petition.
Find the Most Cost-Effective Closure Route
The cheapest lawful way to close a company depends on whether it is solvent, insolvent or capable of being rescued.
For a simple solvent closure, strike off will usually cost the least.
For an insolvent company, a CVL is normally the safest voluntary route, with the cost often funded from company assets where available.
For a solvent company with significant retained profits, an MVL may produce the best overall outcome despite its professional fees.
Speak to Business Helpline
Business Helpline can review your company’s circumstances and explain:
- Which closure route is available
- What the likely cost will be
- Whether assets can fund the process
- Whether staged payments may be available
- Whether you may qualify for director redundancy
- Whether strike off, CVL, MVL or another option is more appropriate
Contact us for a free, confidential discussion before committing to any company closure procedure.
Cheapest Way to Liquidate a Company FAQ’s
What is the cheapest way to close a limited company?
Voluntary strike off is usually the cheapest option for a solvent company whose debts, tax affairs and assets have been dealt with.
What is the cheapest way to close a company with debts?
A CVL is normally the most appropriate voluntary closure route where an insolvent company cannot pay its debts. Fees may be paid from company assets where funds are available.
Can I close a company for free?
Strike off does not require a liquidator, but the Companies House application fee still applies. Formal liquidation requires an authorised insolvency practitioner or the Official Receiver.
Can I strike off a company that owes HMRC?
A company may apply, but HMRC can object where tax debts or unresolved returns remain.
Is strike off cheaper than liquidation?
Yes, but the procedures serve different purposes. Strike off is designed for eligible companies with straightforward affairs, whereas liquidation formally deals with assets and creditors.
Can company assets pay for a CVL?
Yes. CVL fees are normally paid from available company cash and assets before funds are distributed to unsecured creditors.
Is compulsory liquidation cheaper than a CVL?
It should not be treated as a cheap alternative. Court and petition costs apply, and directors lose control over the timing and initial appointment process.
