What does 'dormant' mean under the Companies Act?

By Ben Davies · Updated 5 October 2026

Under the Companies Act 2006 (section 1169), a company is dormant during any period in which it has no significant accounting transactions.

What counts as significant?

A "significant accounting transaction" is any transaction that must be entered in the company's accounting records. This includes:

• Receiving money (even bank interest)
• Making payments (even small ones)
• Issuing invoices
• Buying or selling anything

What doesn't count?

The law disregards the shares taken at formation and exactly four payments:

• Shares taken by subscribers on formation — the initial share capital paid by founding shareholders when the company was incorporated.
• The confirmation statement fee.
• A change-of-name fee.
• A re-registration fee.
• The penalty for filing accounts late — the late filing penalty charged under section 453.

Paying one of those from the company's own account doesn't end dormancy. Nothing else is disregarded, however small. That includes other Companies House fees, such as the strike-off fee or the fee for registering a charge, and Companies House's newer fines, such as one for a late confirmation statement.

Dormant doesn't mean empty

The test is about what happened during the year, not about what's on the balance sheet. A company that traded once and still owes money, is owed money or holds assets can be dormant, as long as nothing about them changes in the year: nothing paid or collected, no interest added, nothing written off or written down. Its dormant accounts show those figures, unchanged. See can a dormant company have assets and liabilities?

Why the definition matters

If your company qualifies as dormant, you can file simplified dormant accounts instead of full accounts. Filing dormant accounts for a company that is not actually dormant is an offence.

HMRC has its own test for Corporation Tax: a company is usually dormant for Corporation Tax if it has stopped trading and has no other income, such as bank interest or investments. The Companies Act test catches more, because any recorded transaction ends it — a company with a bank charge and nothing else can be dormant for HMRC but not under the Act. See our full guide for the comparison, or run our free Am I dormant? checker to get a verdict for both regulators in eight questions.

Both filings still apply

Even dormant companies must file accounts with Companies House every year, and a CT600 with HMRC whenever HMRC sends a notice to deliver one. We file both, and remind you when the confirmation statement is due — see how it works.

Read the full guide: How to check if your company is dormant