Dormant vs non-trading company: what is the difference?
By DormantFile · Updated 1 June 2026
"Dormant" and "non-trading" sound like they mean the same thing. They usually overlap, but they are legally distinct terms used by different bodies, and the difference matters for your filings.
"Dormant" — the Companies House definition
Under section 1169 of the Companies Act 2006, a company is dormant if it has had no significant accounting transactions during the accounting period.
The only transactions that do not count are:
- Payment for shares taken by subscribers on formation
- Fees paid to Companies House (such as the annual confirmation statement fee)
Everything else — any money in, any money out, including bank interest — is a significant accounting transaction.
If a company is dormant under this definition, it can file simplified dormant accounts with Companies House: a balance sheet showing nil figures and a statement that the company was dormant throughout the period.
"Non-trading" — the HMRC definition
"Non-trading" is not a formal statutory term in the same way, but HMRC uses it to describe a company that:
- Is not carrying on a trade or business
- Has no income from any source
- Has no chargeable gains
This is the definition HMRC applies when deciding whether a company can be treated as dormant for Corporation Tax purposes. If a company is non-trading, it may be able to file a nil CT600 return (or, in some cases, HMRC may not require a return at all — see our guide on whether you need a CT600).
Where they overlap
For most dormant companies, both definitions are satisfied at the same time. A company that was incorporated but never traded, has no bank account, and has done nothing since formation is:
- Dormant under the Companies Act (no significant accounting transactions)
- Non-trading for HMRC purposes (no trade, no income, no gains)
This is the straightforward case. File dormant accounts with Companies House and a nil CT600 with HMRC (if registered for Corporation Tax). Both filings confirm the same thing: nothing happened.
Where they differ
The two definitions can come apart. Here are the scenarios that catch people out:
Non-trading but NOT dormant
A company that is not carrying on a trade can still have significant accounting transactions. For example:
- A company that receives bank interest. It is not trading and has no business activity, but the interest is a significant accounting transaction. It is non-trading for HMRC purposes but not dormant under the Companies Act.
- A holding company that receives dividends from a subsidiary. It is not trading itself, but the dividend receipt is a transaction. Not dormant.
- A company that pays for a registered office service from its own bank account. The payment is a significant accounting transaction, even though the company is not trading.
In these cases, the company cannot file dormant accounts with Companies House. Instead it files micro-entity accounts (FRS 105) — or, if it is larger, small-company accounts — showing the transactions on a short balance sheet, even though they are small. Whether HMRC also wants tax paid depends on the income: a company that only repays a loan has no taxable profit and files a nil CT600, while one that earns interest or dividends has income to report.
Dormant but treated differently by HMRC
This is less common, but a company can be dormant under the Companies Act while HMRC still requires a CT600. For example, if HMRC has the company on its records as active and has issued a notice to deliver a return, you need to file one — even if the company is dormant and the return will show nil figures.
What it means in practice
| Situation | Companies House filing | HMRC filing |
|---|---|---|
| Dormant AND non-trading | Dormant accounts | Nil CT600 (if registered) |
| Non-trading, no income (e.g., repaying a Bounce Back Loan) | Micro-entity accounts | Nil CT600 (if registered) |
| Non-trading but with income (e.g., received bank interest) | Micro-entity or small accounts | CT600 showing the income |
| Not sure | Seek professional advice | Seek professional advice |
The key question is always: has the company had any significant accounting transactions?
If the answer is no, the company is dormant and you can file simplified accounts. If the answer is yes — even if the company is not trading — you need micro-entity (or small-company) accounts rather than dormant ones, and potentially a CT600 that reports the income.
How to check
Our guide on how to check if your company is dormant walks through the common scenarios in detail, and our free Am I dormant? checker gives you a yes/no across both definitions in eight questions. The simplest test:
- Look at the company's bank statements for the period. Any transaction (in or out) means the company is not dormant under the Companies Act.
- If the company has no bank account and has made no payments of any kind, it is almost certainly dormant under both definitions.
If your company is non-trading but has a transaction or two — most often a Bounce Back Loan it is repaying — it can't file dormant accounts, but it doesn't need a full accountant either: it files FRS 105 micro-entity accounts, which DormantFile now handles alongside dormant ones. If the company has income or gains (interest, dividends, rent), there may be tax to pay and a CT600 to complete properly — that is where you should speak to an accountant.
Key points
- "Dormant" is a Companies Act term meaning no significant accounting transactions. "Non-trading" is an HMRC term meaning no trade, income, or gains.
- They usually overlap, but a company can be non-trading without being dormant (e.g., if it earns bank interest).
- If dormant under both definitions: file dormant accounts + nil CT600.
- If non-trading but not dormant: file micro-entity (or small-company) accounts, not dormant ones. DormantFile files micro-entity accounts for the common loan-only case; if there is income or gains, see an accountant about the tax.
- When in doubt, check your bank statements. Any transaction means the company is not dormant.