Closing the company is the easy part. Telling America what you received is not

Figures relate to tax year 2025-26 (UK) · 2025 (US)

The company has done its job. Trade has stopped, the last invoice went out months ago, and cash sits in the account waiting to come out.

Britain makes closing it almost trivially cheap. America takes a much closer interest in what you took out on the way, and a strike off done in the wrong order can turn a capital gain into a dividend.

Key takeaways

• A voluntary strike off is the cheapest way to close a solvent company.
• Distributions on a strike off get capital treatment only up to a limit.
• Above that limit Britain taxes the whole amount as a dividend.
• America applies its own liquidation rules and ignores the British route.
• The order of events matters more than the paperwork.
• A formal liquidation lifts the limit but costs considerably more.
• Reporting obligations for the company continue until it is gone.

What is a strike off?

It is an application to take a company off the register at Companies House. That ends its life. According to the published guidance, the company must have stopped trading and must not have changed its name in the past three months.

The form is short and the fee is small.

Objections can pause the process at any point.

How are the final distributions taxed here?

As capital, but only up to a statutory limit. Britain treats distributions to shareholders on a strike off as capital where the total stays within £25,000, which usually means capital gains rates rather than dividend rates.

Go a pound over and the whole sum becomes a dividend.

There is no tapering and no partial relief.

How does America see the same payments?

It applies its own liquidation analysis rather than following the British label. America generally counts what you receive in complete liquidation as payment for your shares, which produces a capital gain or loss measured against your basis.

Distributions before a liquidation begins are different.

Those are usually dividends on the American side.

A worked example

The figures below are illustrative and use round numbers to show the mechanics.

Nadia is American and closes her consultancy in Bath. The company holds £24,000 after paying its final tax bill, and she takes the lot before applying.

Britain treats the £24,000 as capital because it sits under the limit. Her annual exempt amount covers part of the gain.

America also treats it as proceeds for her shares, because the company then ceased to exist. The two answers agree, which is exactly what careful sequencing achieves.

The two treatments compared

Both sides need checking before any money moves, not afterwards.

What if the reserves exceed the limit?

Then a strike off is usually the wrong route. A members voluntary liquidation lets the whole amount come out as capital. A liquidator costs a few thousand pounds. On a large balance, the tax saved is normally far more than the fee.

The crossover point is lower than people expect.

Run the comparison before choosing either path.

Can you take dividends first and then strike off?

You can, and many people do, but it changes the character of what you receive. Both countries tax a dividend paid before the closure as income, and only the final balance gets capital treatment.

Splitting across two tax years can help here.

In our practice that often delivers the simplest saving.

Does anti-avoidance apply?

It can, where someone shuts a company and starts a similar one soon after. Britain has rules that turn the capital sum back into income. Two years is the period to keep in mind.

Trading again in the same field triggers the question.

The motive behind the closure matters too.

What is your basis in the shares?

Whatever you paid for them, which in most small companies is a token sum. So nearly the whole payout is a gain in America. You convert it to dollars at the rate on the day it left.

A hundred pound share capital gives almost no relief.

Loans you made to the company are different.

What about a director loan balance?

You have to clear it before the company goes, one way or another. Britain taxes a written off loan as income here, and the write off does not make it vanish from your American return either.

Our guide to the director loan account covers the mechanics.

Repaying it in cash is usually cleaner.

Do the American filings stop immediately?

Not quite. You still report the company for the part of the year it existed, and the final return covers the period up to dissolution rather than ending when trading stopped.

Our guide to Form 5472 for UK LLC owners covers one of the forms.

Missing a final filing carries its own penalty.

What happens to anything left behind?

It passes to the Crown, which is a genuinely bad outcome. Cash still sitting in a bank account at dissolution becomes ownerless property, and recovering it means restoring the company first.

Empty the account before applying.

Restoration costs far more than the original closure.

Does the company owe tax on the way out?

A final corporation tax bill usually covers the last period of trading, and you must settle it before anything reaches shareholders. Distributing cash the company still owed in tax becomes your problem personally.

Leave a margin for the final assessment.

You can distribute any surplus afterwards.

How long does it take?

Around three months from the application, assuming nobody objects. A notice appears in the Gazette, interested parties get a chance to raise concerns, and the company disappears from the register once that window closes.

Creditors objecting restarts the whole process.

Plan the timing around your own tax year end as well.

Settle every bill before applying.

What if you keep working in the same field?

Then the anti-avoidance question becomes real rather than theoretical. Carrying on the same trade personally or through a new company within two years is exactly the pattern these rules target.

A genuine change of direction is defensible.

A new company doing identical work is not.

Do you need shareholder approval?

Every director has to sign the application, and in practice the shareholders need to agree as well since they receive whatever comes out. A single director and shareholder company makes that step straightforward.

Disagreement between owners stops the process cold.

Settle the split before anyone signs.

What about employees and payroll?

The payroll scheme has to close properly. Send the final submissions and make any redundancy payments before the company goes. A scheme closed badly leaves the company looking active long after it has stopped.

Our guide to redundancy pay covers the employee side.

A one person company still needs the final submission.

Does VAT need deregistering?

Yes, and the final return often produces a balance either way. Stock and assets on hand at deregistration can trigger a charge, which catches people who assumed the last return would be a formality.

Deregister from the date trade actually stopped.

Leaving it registered invites unnecessary assessments.

What if the company is insolvent?

Then a strike off is not available and the route changes entirely. An insolvent company needs a formal process run by a licensed professional, and directors carry real personal risk if they distribute anything first.

Creditors come before shareholders in every scenario.

Take advice early rather than late here.

Does the currency rate matter?

It matters for the American figures. Your original share cost converts at the rate when you subscribed, and the distribution converts at the rate when it reached you, which can create a currency element on its own.

Shares subscribed years ago show this most.

Record both rates when each transaction happens.

What records should you keep afterwards?

The final accounts, the corporation tax computation, the distribution calculation and proof of the date of dissolution. Both authorities can ask about a closed company long after it has gone from the register.

Six years is the sensible minimum.

Nobody else holds these records once the company goes.

Can a struck off company be brought back?

It can, through a court or an admin restoration. Usually assets turn up, or a creditor appears. The company then counts as though it never left, and every filing duty reopens.

Restoration is slow and expensive.

Avoiding it is far cheaper than fixing it.

What does it cost?

Very little. The fee to apply is a matter of pounds rather than hundreds, which is why so many owners pick this route. The real cost is the tax on how you take the money out.

A liquidation costs far more up front.

Weigh the fee against the tax before you choose a route.

It can still be the cheaper choice overall.

Can you do it yourself?

The form itself is simple enough to file alone. The hard part is the order of events before it, and that is where advice earns its keep rather than on the filing.

Most of our work here happens before the form.

By the time it is filed, the tax is set.

What if a creditor objects?

The process stops. Anyone owed money can object during the notice period, and the company stays on the register until the debt is dealt with. Suppliers and HMRC are the usual objectors.

Pay every bill before you apply.

One unpaid invoice can cost you months.

How to close it cleanly

1. Stop trading and settle every outstanding invoice and bill.
2. File the final accounts and the final corporation tax return.
3. Pay the closing corporation tax before touching the reserves.
4. Check whether the remaining balance exceeds the capital limit.
5. Distribute the balance and empty the company bank account.
6. Apply to Companies House and wait out the notice period.
7. Report the distribution on your American return for that year.

Mistakes and penalties we see with a strike off

The first is distributing more than the limit and losing capital treatment entirely.

The second is leaving cash in the account at the moment of dissolution.

The third is assuming the British capital treatment carries across automatically.

The fourth is starting a similar company inside the two year window.

How US UK Tax Accountants helps

We model the closure before anything moves, compare a strike off against a formal liquidation on your numbers, and sequence the distributions so both countries reach the same answer. Then we handle the final filings on each side.

Where a company has already gone, we work out the cleanest reporting position. Our US federal return service covers the filing.

If you are closing a British company and file in America, get in touch before the first distribution leaves the account.

Last reviewed 6 October 2026. This article is general information and not personal tax advice. Every closure turns on its own facts, so take advice on yours before distributing.