How do I close or wind up my limited company — what is an MVL and is it worth it?
Direct Answer
There are two main ways to close a solvent UK limited company: voluntary strike-off (simple, cheap, suitable for small retained profits) or a Members' Voluntary Liquidation (MVL) (more expensive but far more tax-efficient for companies with over £25,000 in retained profits). An MVL allows you to extract retained cash as a capital distribution taxed at CGT rates (as low as 10% with Business Asset Disposal Relief) rather than dividend rates of up to 33.75%.
Method 1 — Voluntary strike-off (DS01)
Best for companies with retained profits under ~£25,000 or no significant assets
Cease all trading and transactions
Pay all employees, suppliers, creditors, and HMRC
Close the business bank account (transfer remaining cash to director as dividend first)
File DS01 form at Companies House — £8 fee (online)
Wait ~3 months — if no objections, company is struck off the register
⚠ You must declare any cash taken from the company before striking off. Distributions in the final two years may be treated as income rather than capital gains up to certain limits.
Method 2 — Members' Voluntary Liquidation (MVL)
Best for companies with retained profits over £25,000 where Business Asset Disposal Relief is available
A licensed insolvency practitioner (IP) is appointed as liquidator
Liquidator distributes assets to shareholders as a capital distribution
Capital distribution is taxed as CGT, not income
With Business Asset Disposal Relief (BADR): 10% CGT on lifetime gains up to £1 million
MVL tax saving worked example
Director with £100,000 in retained profits:
| Method | Tax paid | Net received |
|---|---|---|
| Take as dividends (higher rate) | £33,750 | £66,250 |
| MVL without BADR (24% CGT) | £24,000 | £76,000 |
| MVL with BADR (10% CGT) | £10,000 | £90,000 |
Saving vs dividends: up to £23,750 on £100,000
Business Asset Disposal Relief (BADR)
10% CGT rate on qualifying gains up to £1 million lifetime allowance
To qualify: owned company shares for at least 2 years, been an employee/director throughout
Must apply when filing your Self Assessment — not automatic
Confirm current BADR rate with your accountant — rates are subject to Budget changes
MVL costs and timeline
What you must do before closing
File all outstanding annual accounts and CT600 returns
Pay all corporation tax, VAT, and PAYE due
Submit final payroll and deregister as employer
Deregister from VAT if applicable
Keep records for 6 years post-dissolution — HMRC can still investigate
Closing a company has major tax implications.
Autobooks advises on MVL planning, BADR eligibility, and final accounts preparation. From £89+VAT/month.