Dormant vs non-trading company: what is the difference?

By Ben Davies · Updated 5 October 2026

"Dormant" and "non-trading" sound like they mean the same thing. They usually overlap, but they aren't the same. "Dormant" has a legal meaning at Companies House and its own meaning at HMRC. "Non-trading" is a looser, everyday description, 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 things that do not count are:

• Payment for shares taken by subscribers on formation
• The fee for the annual confirmation statement (the yearly check that the company's details on the register are right), a change-of-name fee and a re-registration fee, paid to Companies House
• The penalty for filing accounts late

Everything else — any money in, any money out, including bank interest and bank charges, and entries where no money moves, such as depreciation or writing off a debt — 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 and a statement that the company was dormant throughout the period. Dormant doesn't mean empty. The balance sheet can be just share capital, or it can carry figures from a trading past — money owed to or by the company, assets it still holds — as long as nothing about them changes in the year: nothing paid or collected, no interest added, nothing written off or written down.

"Dormant" — the HMRC test

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. HMRC's word for this is "dormant", and the opposite is "active".

The Companies Act test catches more than HMRC's. Any recorded transaction ends dormancy at Companies House, while HMRC looks at trading and income. So a company with a bank charge and nothing else can be dormant for HMRC but not for Companies House. A company that receives income of any kind — dividends, rent, interest — or that buys or sells, or employs someone, isn't dormant for either.

HMRC's test isn't what decides whether you file a CT600. A return is due when HMRC sends a notice to deliver one, and HMRC can send one every year, even to a dormant company — see our guide on whether you need a CT600.

"Non-trading" — an everyday word

"Non-trading" isn't a formal test at either body. It's the everyday word for a company that isn't carrying on a trade. A non-trading company may be dormant, or it may have a transaction or two — a loan it is repaying, bank charges — that stop it being dormant at Companies House.

Where they overlap

For most dormant companies, both tests are met 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)
• Dormant for Corporation Tax (no trade, no income)

The same usually goes for a company that traded once, stopped, and has had nothing go through its books since — even if its balance sheet still shows money it owes or is owed.

This is the straightforward case. File dormant accounts with Companies House, and a nil CT600 with HMRC whenever it sends a notice to deliver one. Both filings say the same thing: the company was dormant.

Where they differ

The two tests can come apart. Here are the scenarios that catch people out:

Not 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 isn't trading, but the interest is income and a significant accounting transaction. It is not dormant under the Companies Act, and not dormant for HMRC either.
• A holding company that receives dividends from a subsidiary. It is not trading itself, but the dividend is income and a transaction. Not dormant for either.
• 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, so it isn't dormant at Companies House. With no income, it can still be dormant for Corporation Tax.

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 there is tax to pay depends on the income: a company that only repays a loan has no taxable profit, 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 has it down as active. If HMRC has sent a notice to deliver a return, you need to file one — even for a dormant period, when it will be a nil return.

What it means in practice

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 for both tests in eight questions. The simplest test:

1. 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.
2. If the company has no bank account and has made no payments of any kind, it is almost certainly dormant under both tests.

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" at Companies House means no significant accounting transactions (Companies Act 2006, section 1169). For HMRC, a company is usually dormant for Corporation Tax if it has stopped trading and has no other income. "Non-trading" is an everyday word, not a test.
• The Companies Act test catches more: a company can be dormant for HMRC but not at Companies House — a bank charge is enough. A company with income of any kind isn't dormant for either.
• If dormant for both: file dormant accounts, and a nil CT600 whenever HMRC sends a notice to deliver one.
• If not 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.